Italy's flat tax and the 7% regime for pensioners

Italy has two tax deals that make Brits sit up: a fixed annual payment on all your foreign income if you're wealthy, and a flat 7% for pensioners who move to a small town in the south. Neither works in Rome itself, but both are worth knowing about before you choose where to live.

The short version

The "neo-residenti" flat tax (Article 24-bis of the TUIR) swaps Italian tax on foreign income for a fixed yearly payment, which Italian tax commentators put at EUR 300,000 (about £250,000) for people moving their tax residence to Italy from 2026; confirm the current amount with an adviser [3][4].
Family members can join for EUR 50,000 (about £41,660) each a year under the 2026 rules [3][4].
You must not have been Italian tax resident in nine of the previous ten years, and the deal lasts up to 15 years [4].
The 7% regime (Article 24-ter) taxes all foreign income of foreign pensioners at 7% for up to ten years, if they move to a qualifying small town in the south or in certain earthquake-hit areas [5].
Rome doesn't qualify for the 7% regime. Most Brits won't need the flat tax. Both need careful planning before you move, not after.

Pound conversions use the Bank of England spot rate of 5 November 2026 (£1 = EUR 1.2002).

Why these regimes exist

Ordinary Italian residents pay IRPEF on worldwide income at 23% to 43%, plus regional and municipal surcharges, and report every foreign account and property in the quadro RW, where the FCDO warns the penalties for mistakes are severe [7]. Our guide to Italian taxes for Brits covers that. The two special regimes trade all of that for something simpler, in return for bringing money or people to Italy.

	Flat tax for new residents (24-bis)	7% regime for pensioners (24-ter)
Who it's for	Wealthy people with large foreign income	People receiving a foreign pension
What you pay on foreign income	A fixed sum, reported at EUR 300,000 a year for moves from 2026	7% of foreign income
Family	EUR 50,000 per family member a year	Each person qualifies on their own
Prior non-residence	Not Italian resident 9 of the last 10 years	Not Italian resident in the last 5 years
Where you live	Anywhere in Italy, Rome included	Qualifying small towns only
How long	Up to 15 years	The first year plus nine more
Quadro RW, IVIE and IVAFE	Generally exempt	Exempt
Italian income	Normal IRPEF	Normal IRPEF

Sources: [3][4][5].

The flat tax for new residents (24-bis)

How much and since when

The regime started at EUR 100,000 a year. A 2024 change doubled it to EUR 200,000 for people who moved after it took effect, and the 2026 Budget Law raised it to EUR 300,000 for people transferring tax residence to Italy from 1 January 2026, with the family add-on rising from EUR 25,000 to EUR 50,000 a head [3][4]. If you opted in under the old amounts, check with an adviser which figure applies to you; the transitional rules depend on your date of transfer.

That's roughly £250,000 a year before you've bought a single espresso, so this is a regime for the very wealthy. For most Brits retiring to Italy on a State Pension and a workplace pension, ordinary IRPEF will cost far less.

What it covers

Foreign income only. Rent from your London flat, UK dividends and interest all fall under the fixed payment. Anything earned in Italy, such as an Italian salary or rent from a flat in Prati, is taxed normally [3].
Cherry-picking. You can exclude a country, so its income is taxed under normal rules with a foreign tax credit. Once you exclude a country, you can't bring it back in [4].
Wealth reporting. While the option runs you're generally exempt from the quadro RW, IVIE and IVAFE on the covered foreign assets [4].
Inheritance and gifts. During the option, Italian inheritance and gift tax applies only to assets in Italy, not foreign assets [4]. That's a big point for Brits with a UK house; see Italian inheritance tax and wills for Brits.

Getting in

Check your history. You mustn't have been Italian tax resident for at least nine of the ten tax years before the option starts [4].
Move your residence properly: visa, permesso di soggiorno and registration at the anagrafe. See codice fiscale, residenza and the permesso di soggiorno.
Opt in on your tax return for the year you transfer residence, or the following year, giving your previous tax residences. A ruling request (interpello) to the Agenzia delle Entrate is optional [4].
Pay on time. Failing to pay the substitute tax in full and on time can end the regime [4].

The option runs for up to 15 years and the clock doesn't restart if you change it [4].

The 7% regime for foreign pensioners (24-ter)

This one is aimed squarely at retirees, and it's the deal that has British pensioners looking at maps of Puglia and Sicily.

Who qualifies

You receive a pension paid from abroad. A UK State Pension or a UK workplace or private pension counts as a foreign pension. An INPS pension doesn't, though it doesn't stop you qualifying if you also have a foreign one [5].
You weren't Italian tax resident for the five tax years before the option takes effect [5].
You move from a country with an administrative cooperation agreement with Italy, such as a tax treaty. The UK has one, so Brits moving from the UK are fine. It's about the country you leave, not your passport [5].
You move to a qualifying town. It must be in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia, or on the list of central Italian towns hit by the 2016–2017 earthquakes [5].

The population limit changed in 2026

For years the cap was towns of up to 20,000 people. A 2026 law raised the cap for southern towns, to 30,000 people from April 2026 according to Italian tax commentators [5]; we couldn't confirm it on an official page, so check the current limit with the Agenzia delle Entrate or an adviser. The earthquake-area towns have their own rules. Before you sign anything, check the town's official ISTAT population and ask the comune; this is the single most expensive thing to get wrong.

Rome, a city of millions in Lazio, is nowhere near qualifying. Plenty of Brits live in Rome on ordinary IRPEF and holiday in the south instead.

What you get

7% on all foreign income, not just the pension: UK interest, dividends, rent and foreign gains too [5].
No quadro RW, IVIE or IVAFE for the whole period [5].
Ten tax years: the first year plus the following nine [5].

There are trade-offs. You can't claim a foreign tax credit on income taxed at 7% [5], which matters for UK government service pensions. Under the UK–Italy treaty a civil service, NHS or armed forces pension is normally taxed only in the UK anyway [6], and the UK will tax UK rent whatever you do. Run the numbers before assuming 7% is a bargain for your mix of income.

Opting in

You opt in on your Italian return for the year you move, giving your last foreign tax residence and the foreign pension payer, and pay the 7% in one go by the normal deadline for the income tax balance [5]. Late or partial payment can end the regime unless you fix it by the following year's balance deadline [5].

The UK side doesn't go away

Neither regime changes how the UK sees you.

Leave the UK tax system properly with form P85 or the SA109 pages, and check the Statutory Residence Test [1].
UK rent stays taxable in the UK, under the Non-Resident Landlord Scheme [1].
Your State Pension is still uprated every April, because Italy is in the EEA [2]. See the UK State Pension abroad.
UK inheritance tax can still reach your worldwide estate for up to ten tax years after you leave if you were a long-term UK resident; see inheritance tax for Brits abroad.
Never move a pension to chase a tax regime. Transfers need regulated financial advice, can trigger the overseas transfer charge and attract scammers; check the FCA and MoneyHelper warnings first.

This is general information, and both regimes are a bit of a minefield. A tax adviser who knows both countries can check your case, ideally before you choose a town. And if you'd like to hear from Brits already sipping limoncello on 7%, ask in our community group for Brits in Italy.

Sources

GOV.UK: Tax if you leave the UK to live abroad
GOV.UK (DWP): Countries where we pay an annual increase in the State Pension
Diritto.it: Il regime fiscale dei neo-residenti dopo la legge di Bilancio 2026 (5 March 2026)
Fiscomania: Neo residenti, aumento della flat tax (28 September 2026)
Fiscomania: Pensionati esteri, tassazione al 7% (updated 10 April 2026)
GOV.UK (HMRC): 1988 UK–Italy Double Taxation Convention, in force
GOV.UK (FCDO): Living in Italy (last updated 28 October 2026)

Italy's flat tax and the 7% regime: who really qualifies