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