For many international buyers, purchasing a home in Italy is about much more than owning a property.
It can be the beginning of a new lifestyle.
A home in Puglia, a countryside property in Sicily or a house in a small town in Southern Italy may become a place to spend several months each year — or even a permanent home after retirement.
For certain foreign pensioners considering a move to Italy, there is also an important tax regime worth understanding:
Italy's 7% substitute tax regime for foreign pensioners.
Under Article 24-ter of the Italian Income Tax Code (TUIR), qualifying individuals receiving a pension from abroad who transfer their tax residence to certain eligible Italian municipalities can opt to pay a 7% substitute tax on qualifying foreign-source income.
The regime is not available simply because someone buys a property in Italy.
It depends on the individual's personal circumstances, previous tax residence, pension and the municipality in which they establish their Italian tax residence.
The regime was introduced specifically for individuals receiving pension income paid by foreign entities who transfer their tax residence to qualifying areas of Italy.
Instead of applying ordinary Italian income-tax rules to qualifying foreign-source income, eligible taxpayers may opt for a substitute tax calculated at a flat rate of:
Importantly, the regime is not limited exclusively to the foreign pension itself.
Article 24-ter provides for the 7% substitute tax on foreign-source income of any category falling within the regime, subject to its rules and exclusions.
This distinction can be particularly important for retirees who receive income from investments or other assets outside Italy.
Individual circumstances should always be reviewed by an Italian tax professional before relying on the regime.
The regime is designed for a specific category of new Italian tax residents.
Among the fundamental requirements, the individual must:
receive qualifying pension income paid by a foreign entity;
transfer their tax residence to Italy;
not have been tax resident in Italy during the five tax periods preceding the year in which the option becomes effective;
move from a country with which Italy has an administrative cooperation agreement;
and
establish residence in an eligible Italian municipality.
The legislation therefore concerns foreign pensioners relocating their tax residence to Italy, not property buyers in general.
This is one of the most important recent changes to the regime.
Previously, the population threshold for qualifying municipalities in Southern Italy was generally 20,000 inhabitants.
Article 26 of Law 11 March 2026, No. 34, effective from 7 April 2026, amended Article 24-ter and increased that threshold to:
This potentially makes considerably more towns accessible to qualifying foreign pensioners.
The current Agenzia delle Entrate guidance for the 2026 payment also refers to qualifying municipalities with populations not exceeding 30,000 inhabitants.
For the Southern Italy element of the regime, Article 24-ter identifies municipalities within:
Puglia
Sicily
Calabria
Sardinia
Campania
Basilicata
Abruzzo
Molise
subject to the applicable population requirement.
The legislation also covers certain municipalities affected by specified earthquakes under separate provisions.
This means that the regime is not specifically a Salento incentive.
Salento can certainly be particularly interesting because it contains numerous towns in Puglia that may satisfy the population requirement, but the tax regime extends across a much larger part of Southern Italy.
For a foreign retiree looking for a home in Italy, Salento can combine several elements:
Mediterranean lifestyle, historic towns, countryside properties, proximity to the coast and a wide range of property types.
Depending on the individual municipality and its population, a qualifying buyer may potentially combine the lifestyle advantages of owning a home in Southern Puglia with eligibility for the 7% tax regime.
Properties may range from townhouses in historic centres to countryside villas, traditional homes, trulli and restored masserie.
But the decision should happen in the correct order:
first establish whether the individual qualifies for the tax regime;
then
identify which municipalities satisfy the requirements;
and finally
search for the right property within those locations.
This is considerably safer than purchasing a property first and investigating the tax position afterwards.
This is probably the most important misconception to avoid.
The tax benefit is linked to the individual and their transfer of tax residence — not to the purchase of the property itself.
Buying a €500,000 villa in an eligible municipality does not automatically qualify the buyer for the 7% regime.
Likewise, purchasing a holiday home while continuing to live and remain tax resident abroad does not, by itself, activate Article 24-ter.
The taxpayer must satisfy the personal and residency requirements of the regime.
The regime requires the individual to be a holder of qualifying pension income paid by a foreign entity.
It should therefore not be marketed as a general 7% flat tax for foreigners moving to Southern Italy.
Someone relocating to Puglia to work remotely, run a business or simply purchase a holiday home does not qualify for Article 24-ter merely because they live in an eligible municipality.
Other Italian tax regimes may potentially be relevant to other categories of new residents, but those are separate from the 7% pensioner regime.
This is another aspect that makes the regime particularly interesting.
The legislation refers to foreign-source income of any category, determined according to the relevant Italian tax rules, rather than limiting the 7% exclusively to the foreign pension.
Depending on the taxpayer's individual situation, this can potentially include different categories of qualifying foreign-source income.
However, this does not mean that every source of income everywhere is automatically taxed at 7%.
Income-source rules, applicable tax treaties and the taxpayer's individual circumstances need to be considered.
An Italian tax adviser specialising in international taxation should therefore analyse the taxpayer's income before relocation.
The special regime applies to qualifying foreign-source income.
Italian-source income does not automatically become subject to the 7% substitute tax simply because the individual has opted for Article 24-ter.
This distinction can become important, for example, if a new resident buys an investment property in Italy and receives rental income from that Italian property.
The tax treatment of that Italian-source income needs to be considered separately.
The Article 24-ter regime can apply for the year in which the option becomes effective and the subsequent tax periods within the statutory maximum.
Current tax guidance describes the regime as potentially lasting for up to ten tax periods in total.
This makes it particularly relevant for someone planning a genuine long-term retirement move rather than a short stay in Italy.
Owning a property is not itself a statutory requirement for the 7% regime.
A qualifying individual could potentially establish residence in an eligible municipality without purchasing a home.
For Italy Property Finders clients, however, the regime becomes particularly relevant because someone considering a permanent or long-term move may also decide that purchasing a home makes more sense than renting.
The tax decision and property decision are related — but legally they are two different decisions.
Imagine a retired couple currently living outside Italy.
One or both receive qualifying pension income from abroad and they are considering moving permanently to Puglia.
They are interested in purchasing a property with:
three bedrooms, outdoor space, proximity to the sea, access to an attractive town and a budget of €500,000.
Rather than beginning with every property available across Puglia, the process could start by working with a qualified Italian tax adviser to establish whether they potentially qualify for Article 24-ter.
If they do, the next step can be to identify municipalities that:
satisfy the tax requirements AND suit their lifestyle.
Italy Property Finders can then search within those areas for properties that match their requirements.
The process becomes:
Tax Eligibility → Eligible Areas → Lifestyle Analysis → Property Search → Purchase
rather than:
Buy Property → Discover Afterwards Whether the Tax Regime Applies.
The population threshold creates an interesting property-search challenge.
Two towns only a few kilometres apart may provide a very similar lifestyle while having different eligibility under the regime.
And population figures can change.
Eligibility should therefore be verified using the relevant official population data and legislation at the time the individual intends to exercise the option.
It would be a mistake to choose a property solely because an estate agent or online article describes a town as a “7% tax town.”
Always verify the municipality.
Tax can help narrow the search, but it should not become the only reason for choosing where to live.
A €400,000 home in a qualifying municipality is not automatically a better purchase than a €400,000 home elsewhere.
A buyer planning to spend retirement in Italy should also consider:
healthcare and hospitals;
access to airports and transport;
shops and everyday services;
restaurants and community life;
distance from the coast or countryside;
summer versus winter atmosphere;
international community;
property maintenance;
and
how easy the property may eventually be to resell.
Tax efficiency matters.
But so does enjoying the next ten or twenty years of your life.
The ideal retirement property can be very different from the ideal holiday home.
A beautiful isolated farmhouse may seem perfect during a two-week summer holiday.
But permanent living raises different questions.
How far is the nearest supermarket?
What happens in January?
How easy is the property to maintain?
How far is the nearest hospital?
Do you need a car for everything?
Are there stairs?
Is there heating?
How large is the garden?
Who will look after the property when you travel?
For buyers planning a genuine relocation, Italy Property Finders therefore considers the lifestyle around the property, not simply the building itself.
Depending on the location and budget, international buyers may consider:
historic townhouses;
apartments in historic centres;
villas near the coast;
countryside homes;
traditional trulli;
masserie;
or
properties requiring renovation.
Each has different implications for maintenance, accessibility, renovation, rental potential and long-term ownership.
The right property depends on whether the buyer wants a permanent residence, second home, investment or a combination of these objectives.
Some international retirees want to live in Italy while also generating income from part of their property.
For example, they may consider a property with a guest house, independent apartment or accommodation suitable for rental.
This can potentially be attractive, but the tax consequences should be analysed carefully.
The 7% regime relates to qualifying foreign-source income. Income generated by an Italian property is an entirely separate consideration.
Likewise, operating tourist accommodation may involve additional regulatory and potentially business considerations.
The property strategy should therefore be discussed with the appropriate tax and legal professionals before purchase.
Italy Property Finders does not replace a qualified Italian tax adviser.
We can, however, make the property search work around the tax strategy established by your professional adviser.
For example, once eligibility has been confirmed, we can:
identify suitable qualifying areas, compare towns and lifestyle options, search for properties through our network, organise viewings, coordinate the purchase process and introduce or coordinate the relevant tax, legal and technical professionals.
This creates an integrated approach between:
tax planning and property selection.
For many foreign retirees, another concern begins after the purchase:
Who will look after my property when I am not there?
Italy Property Finders can continue assisting clients after completion through property management and owner representation.
Depending on the agreed service, this can include coordinating maintenance, local suppliers, renovation works and the general management of the property.
If part of the property is intended for rental, we can also coordinate short-term or long-term rental management, subject to the applicable rules and the owner's tax and legal structure.
This can be particularly valuable for international owners who divide their time between Italy and another country.
Before choosing a property based partly on the 7% regime, consider:
1. Do you receive qualifying foreign pension income?
2. Have you been non-resident in Italy for the required previous tax periods?
3. Are you relocating from an eligible country?
4. Does the municipality currently meet the population and territorial requirements?
5. Have you obtained professional tax advice regarding your foreign income?
6. Have you considered the tax treatment of any Italian-source income?
7. Does the town suit your lifestyle as well as your tax strategy?
8. Is the property suitable for permanent or long-term living?
9. What are the purchase and annual ownership costs?
10. Who will manage the property when you are away?
Yes. Article 24-ter of the TUIR provides an optional 7% substitute tax regime for qualifying individuals receiving foreign pension income who transfer their tax residence to eligible Italian municipalities.
No. It applies to qualifying municipalities in Puglia, Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo and Molise, together with certain municipalities covered by the legislation relating to earthquake-affected areas.
30,000 under the current 2026 legislation. Law No. 34 of 11 March 2026 amended Article 24-ter, increasing the threshold from 20,000 to 30,000 inhabitants, effective 7 April 2026. Some older articles and tax material may still refer to the previous 20,000 threshold.
No. Purchasing property does not itself create eligibility. The regime concerns qualifying foreign pensioners who transfer their tax residence to an eligible municipality.
No. Property ownership is not itself a requirement of Article 24-ter.
The regime can apply more broadly to qualifying foreign-source income of any category, subject to the legislation and the taxpayer's individual circumstances.
Italian-source income is outside the basic scope of the substitute tax on foreign-source income and should be analysed separately with a tax adviser.
Yes. Once your tax adviser has confirmed your eligibility, we can help identify locations that meet your property and lifestyle requirements and coordinate the search and purchase.
Italy's 7% regime can make Southern Italy particularly interesting for certain international retirees.
And the 2026 expansion from 20,000 to 30,000 inhabitants potentially opens the door to a wider range of towns and property markets.
But the tax incentive should be the beginning of the analysis — not the end.
The ideal location needs to work financially and personally.
At Italy Property Finders, we can work alongside your tax adviser to transform the eligibility criteria into a practical property search:
Where can you qualify?
Where would you actually enjoy living?
And within those areas, which property is right for you?
From the initial search through purchase, renovation and ongoing property management, we can remain your local point of reference in Italy.
This guide reflects the legislation in force in September 2026. The 30,000-inhabitant threshold was introduced by Article 26 of Law No. 34/2026, which amended Article 24-ter of the TUIR.
Agenzia delle Entrate's current 2026 payment guidance confirms the 7% substitute tax and the 30,000-inhabitant threshold.
Because eligibility depends on individual tax residence, pension source, foreign income, international tax treaties and other personal circumstances, Italy Property Finders should not determine a client's tax eligibility directly. Eligibility should be confirmed by a qualified Italian tax professional before a property purchase is structured around this regime.
Italian Ministry of Economy and Finance – Article 24-ter TUIR
