A major legislative shift has arrived for retirees looking to move to Italy.

According with the Law No. 34/2026 – and starting from April 7^th 2026 – the Italian government has officially expanded the eligibility criteria for the popular 7% Flat Tax regime, raising the population ceiling for eligible municipalities from 20.000 to 30.000 inhabitants.

This update opens the door to medium-sized towns and cities that offer better infrastructure, healthcare, and services compared to the smaller villages previously included.

The core of the incentive remains the same: a 7% flat tax on all foreign-sourced income. However, the geographic accessibility has drastically improved.

Eligible Locations

To qualify for the 7% rate, you must relocate to:

1. Southern Italy & Islands: Any municipality with a population up to 30,000 in Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia, and Sicily.
2. Earthquake-Affected Zones: Towns in Central Italy (Lazio, Marche, Umbria) hit by the 2009 or 2016 earthquakes. The population limit here has also been standardized to the new 30,000 threshold.

Population is determined by ISTAT (National Institute of Statistics) data as of January 1st of the year preceding your move. Always verify the official “Resident Population” count before finalizing your residency.

As known, this regime is one of the most aggressive tax incentives in Europe.

It’s not just about the 7% rate; it’s a “full tax shield”:

• 7% Flat Rate: Applies to pensions, rental income, dividends, and interests generated outside of Italy.
• No Wealth Taxes: Exemption from IVIE (tax on foreign real estate) and IVAFE (tax on foreign financial assets).
• Simplified Reporting: You are exempt from the burdensome “RW framework” (disclosure of foreign assets).
• 10-Year Peace of Mind: The scheme lasts for the year of transfer plus the following 9 years.

We believe that the modification of the Law might also be a game-changer for the real estate market of southern Italy: we aspect in the short term a stronger demand of foreign buyers for those properties located in this larger towns (within 30.000 inhabitants) with an immediate consolidation of the property values and a concrete expectation of growth in the mid/long term.