Italy · Retirement
Substitute Tax for Foreign Pensioners in Southern Italy (Article 24-ter TUIR)
EXPANDED in 2026, bucking the trend. Law No. 34 of 11 March 2026 raised the municipal population ceiling from 20,000 to 30,000 residents, effective 7 April 2026, bringing 74 previously excluded southern municipalities into scope.
The mirror image of Article 24-bis: while Italy tripled the flat tax for the ultra-wealthy, it widened the 7% pensioner regime. Like Greece's Article 5B, the 7% applies to all foreign income, not merely the pension — so a retired principal with a large portfolio can pay 7% on the lot, against EUR 300,000 under 24-bis. Below roughly EUR 4.3m of annual foreign income, 24-ter beats 24-bis outright. The price is geographic: you must actually live in a small town in the Mezzogiorno.
Qualifying routes
7% substitute tax on all foreign-source income for up to 10 years; no investment requirement
The facts
- Total landed cost
- 7% of all foreign-source income annually, for a maximum of 10 years. No lump sum, no entry fee, no investment requirement.
- Physical presence
- Italian tax residence in a qualifying municipality — this one genuinely requires you to live there
- Family
- assessed individually; each qualifying pensioner elects separately
- Permanent residency
- n/a — a tax regime
- Citizenship
- n/a; residence years count toward the 10-year naturalisation requirement
- Language test
- n/a for the regime
- Dual citizenship
- Permitted
- Requirements
- recipient of a foreign-source pensionnot tax resident in Italy for the 5 years preceding the electiontransfer of residence to a qualifying municipality with a population not exceeding 30,000 in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia, or a designated earthquake-affected central municipalitytransfer from a country with an administrative cooperation agreement with Italyelection in the tax return; 7% payable on all foreign income
- The geography is the whole constraint: a qualifying municipality of under 30,000 residents in the South or a designated earthquake-affected area of Central Italy. Milan, Rome and Florence are not options.
- 10 years maximum, against 15 for Article 24-bis.
- You need a genuine foreign pension to qualify.
- Five years of prior non-residence in Italy required.
- Italian-source income is taxed normally at up to ~47.2%.
- 7% is a rate not a cap, so at very large foreign income Article 24-bis eventually wins — model the crossover.
- The expanded 30,000 threshold and the 74 newly eligible municipalities come from Italian tax practitioners reporting Law 34/2026; confirm your specific comune qualifies before committing to a purchase.