Substitute Tax for Foreign Pensioners in Southern Italy (Article 24-ter TUIR)

Reformed Last verified July 2026

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.

This is the mirror image of Article 24-bis. While Italy tripled the flat tax for the ultra-wealthy, it widened the 7% pensioner regime. As with Greece's Article 5B, the 7% rate applies to all foreign income, not just the pension. That means a retired principal with a large portfolio can pay 7% on the whole amount, compared with EUR 300,000 under 24-bis. Below roughly EUR 4.3m of annual foreign income, 24-ter beats 24-bis outright. The catch is geographic. You have to actually live in a small town in the Mezzogiorno.

Qualifying routes

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Foreign pensioner resident in a qualifying southern municipality

A 7% substitute tax on all foreign-source income for up to 10 years, with no investment requirement

The facts

Total landed cost: 7% of all foreign-source income annually, for a maximum of 10 years. There is no lump sum, no entry fee and no investment requirement.
Route type: Pension 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: Not applicable. This is a tax regime, not a residency path.
Citizenship: Not applicable to the regime itself, but residence years do count toward the 10-year naturalisation requirement.
Language test: Not applicable to the regime.
Dual citizenship: Permitted
Requirements: You must be the recipient of a foreign-source pension.You must not have been tax resident in Italy for the 5 years before making the election.You must transfer your residence to a qualifying municipality of no more than 30,000 people in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia, or to a designated earthquake-affected municipality in central Italy.The transfer must come from a country that has an administrative cooperation agreement with Italy.You make the election in your tax return. Once made, 7% is payable on all foreign income.

What can go wrong

The geography is the whole constraint. You need 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, compared with 15 for Article 24-bis.
You need a genuine foreign pension to qualify.
Five years of prior non-residence in Italy are required.
Italian-source income is taxed normally, at up to roughly 47.2%.
7% is a rate, not a cap. At very large foreign income, Article 24-bis eventually wins out, so it is worth modelling the crossover point.
That expanded 30,000 threshold and the 74 newly eligible municipalities come from Italian tax practitioners reporting on Law 34/2026. Confirm your specific comune actually qualifies before you commit to a purchase.