Italy opens 74 new ‘flat-tax towns’, widening 7 % regime for foreign retirees

Foreign pensioners eyeing Italy received a windfall on 28 April when a Substack briefing confirmed that 74 additional municipalities now qualify for the 7 % substitute tax, thanks to Article 26 of Law 34/2026. The reform, in force since 7 April, raises the population ceiling for eligible communes in Southern and quake-hit central regions from 20,000 to 30,000 residents. Early analyses by tax advisory portals calculate that the change adds mid-sized hubs such as Cosenza, Marsala and Olbia to the map—locations with hospitals, fibre-optic internet and direct flight connections that smaller villages often lack. Under Article 24-ter of the Income Tax Code, new tax residents who were abroad for at least five of the previous ten years can elect to pay 7 % on all foreign-source income—including pensions, dividends and capital gains—for ten consecutive years. The broader catchment solves a practical dilemma for mobility planners: executives nearing retirement liked the tax break but balked at the prospect of relocating to a hamlet with no international schooling or rail links. Mid-tier cities now in scope offer a compromise between lifestyle and infrastructure, making the regime genuinely competitive with Portugal’s NHR or Greece’s 7 % pension scheme. Local governments are moving fast. Calabria’s regional agency has launched English-language microsites showcasing qualified towns, while Puglia is drafting fast-track procedures for residency registration. Real-estate agents report a spike in enquiries for three-bedroom apartments in coastal cities newly added to the list, with prices still below €1,800 per square metre—far cheaper than Spain’s Costa del Sol. Advisers caution that the election must be filed with the first Italian tax return and is irrevocable: retirees who move to a non-qualifying city later will lose the 7 % rate. Companies offering pre-retirement packages should therefore help employees lock in housing before arrival and verify municipal population data via the national statistics office (ISTAT).