Italy just expanded one of the most overlooked tax regimes in Europe.
Foreign pensioners who move to a qualifying Italian town now pay a flat 7% substitute tax on all foreign-source income for up to 10 years. That includes pensions, investment returns, rental income, capital gains, and trust distributions. All at 7%.
On top of that, you are exempt from Italy's wealth taxes on foreign real estate and financial assets. No IVIE. No IVAFE. And no requirement to report foreign holdings in your Italian tax return.
Italy just raised the population limit for qualifying towns from 20,000 to 30,000 residents. That means larger, more livable towns are now eligible, including Pompei, Taormina, Ostuni, and Noto. These are not remote villages. These are some of the most desirable places in Southern Italy.
For US citizens and green card holders, this gets even more interesting. The structure interacts with the US-Italy Tax Treaty in a way that may allow the Italian tax paid to be credited against your US tax liability as a foreign tax credit.
This is the kind of regime that most people do not know exists until it is too late. Italy is ranked #6 in our 2026 Nomad Passport Index and is the only G7 country consistently inside the Top 10. The combination of EU mobility, lifestyle, and tax incentives is hard to beat.
We help clients evaluate whether regimes like this fit their full picture. Citizenship, residency, tax structure, banking, family, and lifestyle. Over 1,500 clients have built their international strategy with our team.
If Italy is on your radar, the conversation starts with understanding how it fits alongside everything else.
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