Italy Flat Tax for New Residents 2025: 7% Regime Explained

Italy’s 7% Flat Tax Regime for New Residents in 2025

Italy attracts retirees and remote workers with a 7% flat tax regime on foreign-sourced income. Eligible individuals can significantly reduce tax liabilities for up to nine years by relocating to qualifying municipalities.

Eligibility Criteria

• Receive foreign pension income or certain foreign-sourced earnings.
• Transfer tax residency to a municipality with fewer than 20,000 residents in the regions of Abruzzo, Apulia, Basilicata, Calabria, Campania, Molise, or Sicily.
• Have not been Italian tax residents during the previous five years.

COVERED Income and Exclusions

The 7% tax applies to qualifying foreign income, including pensions, investment returns, and rental income. Italian-source income remains subject to standard IRPEF rates. The regime does not cover capital gains from significant shareholdings realised within the first five years.

Application Process

Opt into the regime via the annual tax return (Modello Redditi), indicating relevant codes in the dedicated section. Alternatively, submit a ruling request to the Italian Revenue Agency for clarification, especially when income sources are complex.

Duration and Renewal

The regime lasts ten years, provided residency and location requirements remain satisfied. Beneficiaries may opt out at any time but cannot re-enter. Maintain proof of residence (utility bills, leases) and register with the municipal registry (Anagrafe).

Complementary Tax Planning

Combine the regime with Italy’s property tax benefits, inheritance planning, and voluntary contributions to the national health service (SSN). Monitor foreign tax credits to avoid double taxation in treaty countries.

Advice: Engage a commercialista to evaluate eligibility, confirm municipal compliance, and coordinate with foreign tax advisors for seamless relocation.