Foreign retirees in Italy: how the 7% flat tax regime works and who qualifies

The 7% flat tax regime is a preferential tax scheme available to foreign retirees who transfer their tax residence to Italy. It allows the application of a 7% substitute tax on all foreign-source income (not only pensions), for up to 9 tax years (plus the year of transfer). The regime is available to individuals who: - receive a pension paid by a foreign entity - have not been tax resident in Italy for at least 5 years prior to the transfer - transfer their tax residence to a municipality with fewer than 20,000 inhabitants located in Southern Italy (Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, Puglia) or in certain municipalities in Central Italy affected by earthquakes The option is exercised through the income tax return for the year in which the residence is transferred and allows, upon request, the exclusion of specific foreign countries from the scope of the substitute tax.

Residence in Italy for registry purposes but tax residence abroad: is it possible and what are the implications?

This is a delicate and potentially risky situation. Under Italian law (Art. 2 TUIR), individuals are considered tax resident if, for most of the year, they are registered in the Italian population registry or have domicile or residence in Italy. Being registered in Italy is therefore a strong legal indicator of tax residence. It can be challenged, but the burden of proof lies with the taxpayer, who must demonstrate that their center of vital interests and habitual abode are abroad, also considering applicable double tax treaties.

Health insurance card for foreigners with elective residence: how to obtain it and what it covers

Foreign nationals holding a residence permit for elective residence may enroll in the Italian National Health Service (SSN) on a voluntary basis, subject to the payment of an annual contribution. Enrollment allows them to obtain the health insurance card and access the same healthcare services provided to Italian citizens, including a general practitioner, specialist visits, and hospital care. The annual contribution is calculated based on total income, with a minimum amount of approximately €387.34. Alternatively, private health insurance coverage may be maintained.

Relocation e vita in Italia

Tax incentives for foreigners moving to Italy: a complete guide

Anyone who decides to move to Italy, changing country and place of work, is most often also interested in another fundamental aspect, how much tax will I pay in Italy? Not everyone is aware that Italian tax law provides for preferential tax regimes for those who transfer their residence to Italy, and with it, skills, foreign pensions or assets generated outside the national territory.

Given that the Italian system now provides several tools in this regard, the first real issue for a foreigner planning to relocate is understanding which tax regime to choose in Italy based on their specific profile.

Since these matters have a significant impact on the finances of the individual or family relocating, the role of a Law Firm specialised in international taxation becomes essential, it is not just about filling out forms, a structured Law Firm verifies tax residence, personal requirements, timing of the transfer, compatibility between regimes and the correct way to exercise the option, as well as the existence of double taxation treaties. An initial mistake may render the benefit unusable or cause it to be lost in subsequent years.

Overview, which preferential tax regimes

When discussing preferential tax regimes in Italy, there is a tendency to group everything together. In reality, the legislation clearly distinguishes at least four main tools:

the first concerns those who move to Italy to work and meet qualified professional requirements, namely the inbound workers regime,
the second concerns those who transfer their residence and wish to subject foreign income to a flat annual tax, namely the new residents regime,
the third is dedicated to holders of foreign pensions who settle in specific eligible municipalities, with a substitute tax of 7 percent on foreign income,
the fourth concerns teachers and researchers returning to Italy to carry out teaching and research activities, with a much stronger tax reduction on eligible remuneration.

The real difference is not only economic. The type of income covered, duration, subjective requirements and also the way of accessing the regime change. Some regimes apply to employment income produced in Italy, others to income produced abroad. Some are automatic in the tax return, others may be preceded by a ruling request. Some last only a few years, others extend up to fifteen years. This distinction is crucial, because choosing the wrong regime may mean giving up a benefit better suited to one’s situation.

Regime	Recipients	Main benefit	Duration	Key point
Inbound workers regime	Workers who transfer residence to Italy (new regime from 1 January 2024)	Taxable base at 50 percent, or 40 percent in certain cases with minor children	5 tax periods (year of transfer plus 4), with possible extension of a further 3 periods in the presence of specific conditions (for transfers from 2024)	Applies to employment income produced in Italy
New residents regime	Individuals who transfer to Italy after a long period of non residence	Flat substitute tax on foreign income	Up to 15 years	With the 2026 Budget Law the amount increases to 300,000 euro, with 50,000 euro for each extended family member
Foreign pensioners 7 percent	Holders of foreign pensions who transfer to eligible municipalities	Substitute tax of 7 percent on foreign income	9 tax periods	Requires eligible municipality and population limit of 20,000 inhabitants
Teachers and researchers	Teachers and researchers who transfer residence to Italy	Taxation of 10 percent of eligible remuneration	6 total periods, with extensions to 8, 11 or 13	University degree and at least 2 years of teaching or research abroad required

Inbound workers regime

The inbound workers regime varies depending on the period in which the taxpayer transfers tax residence to Italy. This distinction is essential to understand which treatment applies in practice.

For transfers from 30 April 2019 to 2 July 2019
For individuals who transferred tax residence to Italy between 30 April 2019 and 2 July 2019, the relief applied at 50 percent. In the presence of specific requirements (such as minor children or the purchase of a property), it was also possible to access an extension of the regime for an additional five tax periods, according to the previous rules.
For transfers from the 2020 tax period
For those who transferred from the 2020 tax period, the benefit was strengthened. Employment income produced in Italy does not contribute to total income for 70 percent, with the possibility of extending the regime for a further five years in the presence of specific conditions, such as dependent children or the purchase of a residential property in Italy within the required timeframe.
Current regime, for transfers from the 2024 tax period
The new inbound workers regime applies to workers who transfer their residence to Italy starting from the 2024 tax period. The benefit consists in the fact that income equivalent to employment income and self employment income derived from the exercise of arts and professions, produced in Italy up to an annual limit of 600,000 euro, contributes to total income only for 50 percent of its amount. The percentage decreases to 40 percent in the presence of minor children. The regime lasts five years and may be extended for a further three tax periods in the event of the purchase of a main residence within the required timeframe.

The requirements are clear. With reference to the worker:

must undertake to be tax resident in Italy for at least four years,
must not have been tax resident in Italy in the three tax periods preceding the transfer,
must carry out the work activity for the majority of the tax period in Italy,
must possess high qualification or specialisation requirements,
where the individual continues to work for the same employer for whom they were employed abroad, or for an entity belonging to the same group, the minimum period abroad increases to six or seven tax periods depending on previous work history.

It should be noted that Italian citizens are considered tax resident abroad when they are registered in the Register of Italians Resident Abroad (AIRE) or when, under the provisions of a double taxation treaty, they are qualified as resident in another State.

As for duration, the regime applies in the tax period in which the transfer of tax residence to Italy takes place and in the following four. If residence is not maintained for at least four years, the benefit is forfeited with recovery of the relief and interest.

For those wondering how to prove the non residence requirement, it is important to note that Circular no. 20 E of the Italian Revenue Agency dated 4 November 2024 clarified that the taxpayer may demonstrate not having been tax resident in Italy also by proving residence in another State under a double taxation treaty.

There are also two enhancements:

the first, already mentioned above, concerns workers with minor children, for whom income contributes to total income for 40 percent,
the second concerns individuals who transfer their registered residence in 2024 and become owners of a residential property used as a main home in Italy within the required timeframe, with extension of a further three tax periods.

In conclusion, the new inbound workers regime can be used together with other preferential regimes provided for those transferring tax residence to Italy. This means that, in the same tax period, it is possible to apply multiple tax benefits simultaneously, provided that the specific requirements of each regime are met.

A concrete example emerges from ruling no. 16 2025 of the Italian Revenue Agency, a taxpayer returning to Italy after a period of academic activity abroad may simultaneously carry out two different activities, such as university teaching and a self employed profession. In this case, they may apply the preferential regime for teachers and researchers to income deriving from academic activity and, in the same tax period, the new inbound workers regime to income produced from freelance activity.

Flat tax 100,000, 200,000, 300,000 euro from 2026 for high net worth individuals

Those who transfer tax residence to Italy may opt for a substitute tax for IRPEF on income produced abroad. The regime involves the payment of a flat tax of €200,000 for each tax period in which the option is in force and it should be noted that, until 10 August 2024, the amount was €100,000. It is worth highlighting, as a major development for those interested in moving to Italy, that the 2026 Budget Law has increased the tax to €300,000 for those who transfer tax residence to Italy starting from 1 January 2026.

The new residents regime in Italy requires that the taxpayer has not been resident in Italy for at least nine tax periods out of the ten preceding the start of the option. The election is made in the tax return relating to the tax period in which tax residence is transferred or in the immediately following one. Before opting, it is also possible to submit a ruling request to the Italian Revenue Agency to verify the existence of the access requirements.

This regime may be extended to family members who meet the requirements. According to the updated guidance as of 16 January 2026, the extension entails a substitute tax of €25,000 per year for each family member. It should be specified that for those who transfer tax residence to Italy from 1 January 2026, the amount for each family member increases to €50,000. The option is automatically renewed from year to year, unless revoked, forfeited or terminated, and in any case ends after fifteen years.

Flat tax 7 percent for foreign pensioners

Among the tax incentives for foreigners in Italy, the regime for foreign pensioners is one of the most targeted. Individuals holding pension income paid by foreign entities, who transfer their tax residence to Italy in certain municipalities, may benefit from an optional regime with a substitute IRPEF tax of 7 percent on any category of income produced abroad. The duration indicated is nine tax periods of validity of the option.

The most delicate point of this regime is not so much the rate, but the place of transfer. The regime is subject to the condition that the transfer of residence takes place in a municipality belonging to specific regions, Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia, moreover, the municipality must have a population not exceeding 20,000 inhabitants. In addition, the Sostegni ter Decree has extended the scope of beneficiaries also to foreign pensioners who transfer residence to municipalities affected by the L’Aquila earthquake of 6 April 2009. The 20,000 inhabitants limit also applies to these eligible municipalities.

For the purposes of identifying the demographic data, reference is made to the annual municipal survey of population movement and calculation published on the ISTAT website, referring to 1 January of the year preceding the first period of validity of the option. This data applies for the entire duration of the regime, unless there is a transfer to another municipality. If the taxpayer moves, from the second tax period onwards, to another eligible municipality, the option remains effective and reference is made to the population as at 1 January of the year preceding the new transfer. For those considering foreign pensioners and the 7 percent flat tax in Italy, preliminary verification of the municipality is therefore essential.

In the tax return the taxpayer is required to provide a series of precise information. In particular they must indicate:

not having been tax resident in Italy for at least five tax periods preceding,
the jurisdiction in which they had their last tax residence among those providing for administrative cooperation agreements,
any foreign States excluded from the application of the substitute tax,
the State of residence of the entity paying the pension,
the amount of foreign income to be subject to the regime.

Access to the regime is achieved through the filing of the tax return relating to the year in which tax residence is transferred to Italy. The option becomes effective starting from that same tax period.

Incentives for professors and researchers

The incentives for professors and researchers in Italy are among the most significant in percentage terms. In fact, in the tax period in which residence is transferred to Italy and in the following five, the remuneration received contributes to income only to the extent of 10 percent of its amount. In practice, 90 percent does not enter the taxable base and is not taxed.

The following may access the regime:

those who carry out teaching and research activities in Italy,
hold a university degree or equivalent,
have been resident abroad not on an occasional basis,
have carried out documented research or teaching activity abroad for at least two consecutive years at public or private research centres or universities,
and acquire tax residence in Italy maintaining it for the entire period of use of the benefit. In the event of moving abroad again, the benefit ceases from the tax period in which Italian tax residence is lost.

For teachers and researchers who moved to Italy from 2020 onwards, the tax relief may extend to eight, eleven or thirteen tax periods, depending on the presence of minor or dependent children, or on having become owners of a residential property in Italy within the required timeframe.

Resolution no. 8 of 2026 clarifies a very useful point, the extension may occur progressively even if children arrive during the preferential period, and not necessarily already exist at the time of return. The same guidance also confirms the compatibility, in the same tax period, between this regime and the new inbound workers regime, if the preferential income belongs to different activities and the requirements of both rules are met.

How to choose the right regime, comparison

The question of which tax regime to choose in Italy does not have the same answer for everyone. However, the various regimes allow for the construction of a very practical criterion. If the benefit arises from work carried out in Italy, the first check should be made on the inbound workers regime or, if the activity concerns teaching or research, on the specific regime for teachers and researchers. If, instead, the focus of the advantage concerns foreign income, the comparison should be made between the new residents regime and the 7 percent foreign pensioners regime. In other words, the key issue is not only how much is paid, but which income falls within the scope of the incentive.

There is then a second level of analysis, which is very important. The inbound workers regime requires qualification or specialisation, work carried out for the majority of the period in Italy and a history of non residence that may become longer if the employer is the same or belongs to the same group. The regime for teachers and researchers instead requires a background of documented teaching or research abroad for at least two years and offers a much stronger benefit in percentage terms. The new residents regime is more suitable for those who wish to absorb foreign income into a flat tax, while the foreign pensioners regime is very selective territorially but highly competitive in terms of rate.

Profile	Most suitable regime	Why
Manager or qualified professional returning to Italy from 2024	Inbound workers regime	It benefits employment income produced in Italy, with taxable base at 50 percent, or 40 percent in certain cases with minor children
University lecturer or researcher with documented activity abroad	Teachers and researchers regime	Eligible remuneration contributes to income only for 10 percent
Individual with high foreign source income transferring residence to Italy	New residents regime	Flat substitute tax on foreign income, with duration up to 15 years
Pensioner with foreign pension wishing to live in an eligible municipality in the South or in eligible earthquake affected municipalities	Foreign pensioners 7 percent regime	Substitute tax of 7 percent on foreign income for 9 tax periods

Procedure, how to apply for the incentives

The methods of accessing tax incentives for foreigners in Italy are not the same for all regimes. Each measure provides for specific steps, but there are some common operational rules that are important to know before relocating.

For the new residents regime in Italy, the option is exercised in the tax return relating to the year in which tax residence in Italy is acquired, or in the immediately following one. Before choosing the regime, it is possible to submit a ruling request to the Italian Revenue Agency to verify the existence of the requirements. Payment of the substitute tax is made in a single instalment within the applicable tax deadlines, using form F24 with a dedicated code. The choice may be revoked in the tax return or by formal communication.

Also for the inbound workers regime, the worker makes an explicit request (through the employer, if employed, or in the tax return or, alternatively, directly at the stage of application of withholding tax by the client on fees received, if self employed).

As seen, the option for the flat tax for foreign pensioners in Italy is completed with the filing of the tax return relating to the tax period in which residence is transferred and is effective from that same year.

The option for the teachers and researchers regime is exercised by means of payment in a single instalment, generally equal to 10 percent of the preferential income of the previous year. Payment is made using form F24, without set off. After payment, employees must submit a written request to the employer with the relevant data, while self employed individuals exercise the option directly in the tax return of the year in which the payment was made.

Typical scenarios / Case studies

The typical scenarios have been developed by drawing on the most significant corporate immigration cases that the firm regularly handles, with the aim of creating structured, complex examples that help the reader navigate their own situation. The case studies, by contrast, illustrate individual real-life matters, anonymised to protect client confidentiality, presented with full factual and contextual detail.

Relocation

US professional chooses Italy: elective residence obtained and future planned

American professional obtains an elective residence visa while maintaining ties with the USA. Integrated assistance from legal strategy to property search..

Application completed in approximately 3 months without additional requests

Read the full case

Business

US opera singer obtains work authorization in 7 days

American opera singer with contracts already signed with an Italian theatre. Self employment work authorization obtained on an urgent basis to meet professional commitments.

Work authorization issued within 7 days from submission of the application

Read the full case

Real Estate

US client purchases property in Rome: secure transaction

American client assisted in the purchase of a property in Rome. Urban planning issues and contractual risks identified and resolved before signing, transaction completed through notarial power of attorney.

Purchase completed within one month, entirely managed remotely

Read the full case

Business

American investor: from New York to a villa in Tuscany

Cross-border property transaction with full relocation service. Purchase of a high-end property, with tax status, residency and NHS registration handled remotely.

Complete relocation service, from property due diligence to handing over the keys

Read the full case

Retirement

Canadian couple, retirement property in Puglia

From Toronto to the Itria Valley. Purchase of a farmhouse with cadastral issues, 7% flat tax on foreign pensions, elective residence visa and healthcare transition.

7% flat tax activated, cadastral issues resolved before the deed of sale

Read the full case

Business

British entrepreneur, opening a business in Milan

Post-Brexit, a London-based tech entrepreneur establishes an operational headquarters in Milan. Immigration pathway as a non-EU national, company incorporation, and tax planning.

European operational hub established with self-employment visa successfully obtained

Read the full case

Tax Planning

Swiss retiree: 7% flat tax regime in Southern Italy

A banking executive relocates from Zurich to Calabria. Management of the Swiss occupational pension pillar, Italy-Switzerland Tax Convention, and deregistration from the cantonal tax register.

7% flat tax activated on all foreign-sourced income

Read the full case

Retirement

American couple: retirement project in Abruzzo with visa and flat tax

From Connecticut to Abruzzo. Elective residency visa, 7% flat tax coordinated with IRS and FATCA obligations, and transition from Medicare to the Italian NHS (SSN).

7% flat tax activated on Social Security and 401(k) pension income

Read the full case

Relocation

German couple, from Munich to Tropea

Retired engineers from the Bavarian automotive sector. Multi-tier pension management, Italy-Germany Tax Convention, and the 7% preferential tax regime.

Three German pension pillars optimised with Italian flat tax

Read the full case

Business

Startup tech: apertura filiale italiana per il mercato EU

A Bay Area SaaS company establishes a Milan headquarters. Innovative startup SRL, EU Blue Card for the team, transfer pricing, impatriates tax regime, and GDPR compliance.

Operational within 5 months, payroll cost −35% with impatriates tax regime

Read the full case

Business

Fashion brand, representative office in Milan

Brand premium newyorkese apre presidio a Milano. Strutturazione per evitare stabile organizzazione, trasferimento direttrice creativa e gestione showroom.

Rischio stabile organizzazione prevenuto, presidio EU operativo

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Corporate

Manufacturing company, ICT transfers to Italy

Multinazionale giapponese trasferisce 3 figure chiave in Piemonte. Permessi ICT per manager e specialista, coordinamento consolare e regime impatriati per tutti i dipendenti.

3 trasferimenti completati in 4 mesi e mezzo, linea produttiva avviata nei tempi previsti

Read the full case

How Boschetti International Law Firm can assist you in obtaining tax incentives for foreigners in Italy

As can be easily observed, the issue is not finding an interesting rule, but verifying whether the specific case actually meets the requirements. An individual may have high foreign income but not meet the minimum period of non residence required for the new residents regime. A worker may move to Italy but not have the high qualification requirements or the necessary foreign history if they continue to work for the same group. A pensioner may meet the personal requirements but choose a municipality outside the eligible scope. A researcher may have academic activity, but not sufficient documentation on the two consecutive years of teaching or research abroad.

In this context, Boschetti Law Firm can be particularly useful in three phases. The first is the preliminary verification of the correct regime, namely a serious comparison between the available alternatives. The second is the preparation of the documentation file, which in international tax matters is often the most important part. The third is the management of relations with the tax authorities when it is appropriate to use instruments such as ruling requests, expressly provided for the new residents regime.

Legal assistance is also important after accessing the regime. Many incentives do not end in the year of transfer, but last for several tax periods and require the maintenance of specific conditions, such as tax residence in Italy, the presence of children in Italy in the cases provided, or the correct management of extension to family members. Well structured advice from the outset helps to avoid forfeiture, disputes and inefficient choices. When it comes to tax incentives and transfer of residence to Italy, the real difference is often not made by the rule itself, but by the quality of the preliminary assessment carried out before the move.

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Foreign pensioners in Italy: how the 7% flat tax regime works and who can access it

The 7% flat tax regime allows individuals receiving pensions from foreign entities to transfer their tax residence to a municipality in Southern Italy (with fewer than 20,000 inhabitants) and apply a 7% substitute tax on all foreign-source income for nine tax years.

Eligible municipalities are located in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, and Puglia, as well as certain municipalities affected by the 2009 earthquake. The regime applies to all categories of foreign-source income. The option is exercised in the tax return, indicating the chosen municipality of residence.

Registered residence in Italy but tax residence abroad: is it possible and what does it imply?

This is a potentially risky situation. Registration in the Italian population registry creates a presumption of tax residence in Italy, with the obligation to declare worldwide income. This presumption can be rebutted by demonstrating that tax residence is abroad, including through registration with the AIRE or under applicable double taxation treaties, but the burden of proof remains on the taxpayer.

The Italian Revenue Agency may assess these situations based on objective factors. The presence of personal or economic ties in Italy may affect the determination of tax residence. It is therefore advisable to define one’s tax position in advance and prepare adequate supporting documentation, also considering tools such as advance rulings.

Health card for foreign nationals with elective residence: how to obtain it and what it covers?

Foreign nationals holding a residence permit for elective residence may enroll in the Italian National Health Service (SSN) on a voluntary basis, subject to payment of an annual contribution. Enrollment grants access to healthcare services under the same conditions as SSN beneficiaries, including general practitioners, specialist care, and hospital treatment.

The annual contribution is calculated based on total income and cannot be lower than €387.34. Alternatively, private health insurance may be used, provided it meets the requirements for residence in Italy.

New residents regime vs inbound workers regime: which is more advantageous and what are the requirements?

The new residents regime (Art. 24-bis TUIR) provides for a flat tax of €200,000 per year on all foreign-source income, regardless of the amount. The inbound workers regime (Art. 16 of Legislative Decree 147/2015) allows a reduced taxation on employment income produced in Italy. They are designed for different profiles.

The new residents regime is suitable for individuals with very high foreign income who do not work in Italy. The inbound workers regime is intended for those who move to Italy for work and have not been tax resident there in the previous two years. They are only partially compatible. The choice should be made before relocating.

Relocation: why are due diligence and real estate advisory crucial before purchasing?

Because the Italian real estate market presents specific risks that foreign buyers may not be aware of: unauthorized building works not regularized, outstanding mortgages, cadastral discrepancies, landscape restrictions, and undisclosed easements. Technical and legal due diligence carried out before signing the preliminary agreement allows these issues to be identified while it is still possible to renegotiate or withdraw.

Specialized real estate advisory for foreign clients also includes urban planning checks, verification of systems compliance, independent property valuation, and assistance in negotiations. Purchasing without these checks exposes the buyer to unexpected costs and post-acquisition disputes.