A flat 7% tax on foreign pension income is real, but only in specific southern towns. What the elective residency visa, the tax break and daily life actually cost.
Italy offers one of Europe's most genuinely attractive tax breaks for foreign retirees — but it only applies in specific places, and it's a different thing entirely from the visa that lets you live there in the first place. This guide separates the two and adds a realistic cost picture.
The visa: elective residence
Non-EU retirees use the elective residence visa (visto per residenza elettiva), built for people living on passive income rather than a job. For 2026, the commonly cited minimum is around €32,000 a year for a single applicant and about €38,000 for a couple, with roughly €5,000-8,000 more per dependent — though individual consulates have real discretion, and some, particularly in the US, routinely expect €40,000-60,000 for a single applicant in practice. The income must be passive — pension, rental income, dividends or investment income — not a salary or freelance earnings. You'll also need to show accommodation in Italy, whether owned, rented or via a formal invitation.
The tax break: 7% flat tax, with real conditions
Separately from the visa, Italy's Article 24-ter regime lets a qualifying foreign pensioner pay a flat 7% tax on all foreign-source income — pension, foreign dividends, interest, overseas rental income, foreign capital gains — for up to 10 years, with no wealth tax, no foreign-asset reporting and no inheritance tax on foreign wealth while the regime applies. This is a different, much more specific benefit from the high-net-worth flat-tax regime some of our other Italy content covers (that one is a flat €300,000 a year and aimed at a different kind of new resident entirely — don't confuse the two).
To qualify you must not have been an Italian tax resident in any of the previous five years, and you must relocate to a small municipality in one of the South's regions: Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia. The population cap on qualifying towns was raised in April 2026 from 20,000 to 30,000 residents, opening 74 more municipalities to the regime — worth checking against the current list before you commit to a specific town, since it keeps being adjusted.
Where retirees actually settle
Puglia is a particular draw for this exact combination — trulli villages, a Mediterranean pace and towns that qualify for the 7% regime. Sicily and Calabria offer the lowest cost of living in the regime's eligible zone. Our separate best-areas guide for Italy covers the property side of these regions in more depth; here the filter is simply: does the town you like also sit under the population cap.
Healthcare
Once legally resident, you can register with Italy's national health service (SSN), typically through a modest annual contribution tied to income rather than full private premiums — a real, practical advantage over markets where retirees must carry private insurance indefinitely. Before residency is granted, private health insurance is required to support the visa application itself.
Cost of living
The South is markedly cheaper than the North and the big art cities: day-to-day costs in a Puglian or Sicilian town commonly run a large step below Rome, Florence or Milan, which is part of why the regime and the affordability line up so well for a retired budget. Build your own number from local rent, groceries and utilities for the specific town, not a national average — regional variation is large.
FAQ
Does the 7% tax regime apply anywhere in Italy? No — only in qualifying small municipalities in the South, under the current population cap. Can I use both the visa and the tax regime together? They're separate applications with separate conditions — qualifying for one doesn't automatically qualify you for the other, though most people pursuing this route apply for both. How long does the 7% rate last? Up to 10 years from the year you opt in. Do I need private health insurance forever? No — once you're a legal resident you can generally register with the SSN; private cover is mainly needed to support the initial visa application. Is pension income from any country eligible for the 7% rate? The regime targets foreign-source income broadly, including pensions, but confirm your specific country and income type with a tax adviser before relying on it.
How we help
We help match a retirement plan to a town that is both liveable and actually eligible for the 7% regime, and connect you with Italian tax advisers and immigration lawyers for the visa and tax-residency filings. Informational only, not immigration or tax advice — eligibility rules and income thresholds change and should be confirmed for your specific situation before you act.