What is 7% flat tax in Italy?
Italy introduced the special tax regime under Article 24-ter of Presidential Decree No. 917/1986 (TUIR), specifically to encourage foreign pensioners to establish their tax residence in certain areas of Southern Italy.
This is a special tax regime, in force since the 2019 tax year, which is available to individuals who are not tax resident in Italy, receive pension income paid by foreign entities, and transfer their tax residence to Italy. The preferential regime allows eligible taxpayers to opt for a substitute tax on foreign-source income instead of being subject to the ordinary Italian tax rules.
More specifically, individuals who were previously non-resident for tax purposes and transfer their tax residence to certain municipalities in Southern Italy may elect to have foreign-source income of any category subject to a 7% substitute tax rate, for a maximum period of ten tax years, starting from the tax year in which the option is first exercised.
