Did you know you could retire in Italy and pay only 7% income tax to the Italian government? The normal income tax in Italy can range up to 43% so paying only 7% is quite a bargain.
This place is intended to provide resources for people who are intrested in participating in the Italian 7% tax regime for retirees. I have collected data and useful links to help you explore the topic.
In 2019 the Italian government established a special incentive to attract retirees to settle in Italy in areas deemed to need economic stimulation. Many small towns and rural areas of Italy have been losing population. The Italian government wants to help stimulate these areas. The resources linked below can help people find information about the 7% program.
The basic eligibility requirements under the original law are:
What are the approved areas? Under the original law they are any comune with a population not exceeding 20,000 people in the following regions: Abruzzo, Basilicata, Calabria, Campania, Molise, Pulia, Sardinia, and Sicily. The 2019 law also designated specific small towns with population of 3,000 or less which are in designated seismic zones as a way to revitalize those towns.
The government modified the 7% program in 2022 to include more towns outside the 8 southern regions. Again, the law gave specific criteria for qualifying towns which now include some towns with population over 20,000. Please note there is not universal agreement about whether certain comuni qualify for the 7% program. See the note on this page.
The special tax incentive will apply for 10 years. The 7% rate does not apply to income you generate in Italy, only to your non-Italian income. But wait, there's more! Normally the Italian government imposes a wealth tax which is applied to savings and property worldwide. The 7% tax program exempts you from those taxes on assets outside of Italy and you don't even have to disclose those assets to the Italian government. When the 7% tax applies, neither the Regional nor the Municipal income taxes apply.
Many countries have a tax treaty with Italy to prevent double taxation. The United States is one of those countries, but there are many others. Here is an example of how it works, suppose a US citizen is participating in the 7% program. Let's say it turns out she will pay the Italian government €5,000. She is still required to file and pay income taxes to the US government. Suppose her tax liability to the US is $7,000. She gets a credit for paying the Italian tax which is deducted from the amount owed to the US. So (assuming an exchange rate of 1:1) she would owe the US only $2,000. This means she really pays the same amount in income taxes than if she lived in the US. She just pays it to different governments.
There is a companion Facebook group called "All Things Italy 7% Tax for Retirees". Join us there to ask questions and discuss things related to the 7% tax program.
The buttons below will lead you to more information. If you're looking for the official text of the laws, click on "Flat Tax Laws" below. To find out which towns qualify by reason of their population or location, click on "Italian Population Data Made Easy". To use a map of Italy with all the Italian towns listed (with population data), click on "Italian Comuni Boundaries".
Please be sure to look at the links below for "Italian Population Data Made Easy" and "Italian Comuni Boundaries". The files I have compiled there make it MUCH more convenient to search for a qualifying comune.