A low tax scheme in Italy, that has proven highly popular for international retirees from the UK, USA and further afield, has been extended to include larger towns.
The 7% flat tax regime for foreign retirees now includes some small towns with up to 30,000 inhabitants. Previously, you could only consider villages in the south with a population under 20,000. Now you can add bigger municipalities to your search list, with all the additional services and infrastructure demanded by a larger population. ย
What has changed?
An amendment to Article 26 of Law no. 34 of 2026, came into force on 7 April 2026. It increased the threshold from 20,000 to 30,000 inhabitants, opening the benefit to small towns that were previously excluded. See the official explanation here.
What regions does the 7% tax regime apply to?
It applies to the Southern Italian regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia.
It also applies to municipalities affected by seismic events in 2009 (such as the L’Aquila earthquake), 2016 and 2017.
What are the benefits?
The scheme allows individuals with pension income from foreign sources to opt to subject all income produced abroad, to a flat-rate substitute tax of 7% for each tax period during which the option is valid, up to 9 years.
There are also additional tax benefits and exemptions, which ease the obligations associated with holding assets abroad. Such as property and savings you may have. I advise speaking to a tax accountant to discuss your personal situation. Some public service pensions are taxed differently.
Who can apply for the 7% scheme?
To qualify you must:
- Transfer your tax residence to one of the municipalities in southern Italy (Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia) with a population not exceeding 30,000 inhabitants. Or a municipality affected by seismic events.
- Not have been tax resident in Italy in the five tax periods preceding the one in which the option becomes effective;
- Come from a country with which administrative cooperation agreements with Italy are in force.
Are the towns in the middle of nowhere?
The extension of the threshold from 20,000 to 30,000 inhabitants brings some interesting small towns onto the list of potential locations to retire to. We shouldnโt assume that these are all remote hill top villages with a diminishing population. There are now some additions that are less than 20 minutes from the sea or a large town.
There are actually some great additions to the list that are of historical, environmental, and cultural interest. These small towns still have that friendly community feel, but also have extra facilities, such as a hospital, train station, restaurants, and a good selection of shops all year round. They are not necessarily far from an airport either.
A good example is Mesagne (Population 25,738) in the popular Puglia region. This is a town I visit regularly, because it has a lovely historic centre with a castle, superb restaurants, and a wonderful Medieval event each year. It has a hospital, clinics, museum, train station, weekly market, shops and restaurants.
Five minutes from the town there is an out-of-town shopping centre, and large DIY store. A big bonus is Mesagneโs central location. You can hop on the dual carriageway and reach the city of Brindisi, itโs large hospital and the airport in less than 20 minutes. Plus, the beaches of the Torre Gauceto Nature reserve and itโs turtle rescue facility are just 5 minutes further on.
Why is the south attracting retirees?
Apart from the benefit of paying just 7% tax, foreign retirees are also discovering that house prices in the south can be as much as 50% cheaper than in the north.
In the regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Puglia you can enjoy wonderful fresh produce, long hot summers and a lower cost of living than in the northern cities.
Sicily and Puglia have become particular favourites, as they are already popular holiday destinations with great beaches. The popular tourist town of Ostuni, has a population just under the 30,000 mark.
Istat : https://demo.istat.it/app/?i=POS
How do I find the population of a town Iโm interested in?
In Italy you have regions (eg. Puglia). Within those are provinces (e.g. Brindisi) and within those eachย town for administration purposes is referred to as a municipality or comune (eg. Mesagne).
Each comune has a mayor (Sindaco) and a town hall, which deals with waste, police, registry etc.
To find the population of a particular town on Istat, first find the Provincia (province on the drop down list, then click โcercโ and you will see a list of all the โComuneโ in that province. It shows the population for males, females and total.
Which small towns have fewer than 30,000 inhabitants?
I did some research on Istat, which lists population data as of 1 January 2026. Here are some of the municipalities that have between 20,000 and 30,000 inhabitants and therefore are new to the list of โ7% Tax rate townsโ. I have added a brief description of each townโs highlights.
Puglia region
Brindisi province:
- Ostuni (pop. 29,803) – Popular tourist town close to the sea.
- Mesagne (pop. 25,738) – Castle, historic centre and shopping.
- Bari province under 30,000:
- Castellana Grotte (pop. 19,702) โ Caves you can visit.
- Conversano (25,993) โ Norman-Aragonese Castle, City of Art, Cherries.
- Mola di Bari (24,095) โ Authentic fishing village with great food.
- Putignano (25,696) โ Oldest Carnival in Europe with huge floats.
Find properties for sale in Brindisi province here.
Sicily region
Ragusa province:
- Scicli (26,920) – Elegant stone house facades, 15 minutes from the sea. Find properties for sale in Ragusa here.
Agrigento province:
- Palma di Montechiaro (21,302) โ 14th century coastal castle, baroque architecture and beaches.
Find proper
Siracusa province:
- Floridia (20, 997) – 16 minutes drive from the sea and the coastal city of Siracusa.
- Lentini (21,022) โ Greek Archaeological area, Blood oranges, botanical gardens.
- Noto (24,656) โ UNESCO site, elegant baroque, Cathedral of San Nicolo.
- Pachino (22,355) โ Seaside, cherry tomatoes, ancient watch towers.
Catania:
- Aci Catena (27,349) โ Near Mount Etna, Baroque buildings, ancient baths. ย
- Biancavilla (22,917) โ Near Mount Etna Volcano, Baroque history, Impressive Basilica.
- Giarre (26,466) โ Ionian sea, neoclassical architecture, Cathedral, botanical gardens.
- Gravina di Catania (25,330) โ Shopping centre, beer festival, near Catania.
- San Giovanni la Punta (24,458)- near mount Etna, shopping centre, churches.
Find properties for sale in Sicily here.
Campania region
Salerno province:
- Agropoli (21,418)- beaches of black volcanic sand, Cilento National Park, Aragonese castle.
- Capaccio Paestum (22,463) – Archaeological Park of Paestum (Temples of Neptune, Hera, Athena), the National Archaeological Museum, sandy beaches.
- Mercato San Severino (21, 309) โ Medieval castle, archeological park, town hall.
- Nocera Superiore (23,396) โ Churches, monument, medieval streets.
- Pontecagnano Faiano (26,334) โ Sea, history, near Salerno.
Caserta province:
- Casal di Principe (22,004) โ Buffalo mozzarella. 15-20km from the sea.
- Mondragone (28,329) โ Coastal town, medieval castle, roman baths.
- Orta di Atella (27,454) โ Young population, 17th century palazzo, Neapolitan cuisine, shopping centre.
- San Nicola la Strada (21,842) – ย Near Royal Palace of Caserta.
Napoli province
- Pompei (23,517) โ Tourist area for visitors to Pompeii Archaeological park. ย Shops, winery, 2-3km from the sea.
- Bacoli (24,783) – Beaches, Lake Fusaro, an 18th century royal residence.
- Ottaviano (23,364) – Within the Vesuvius National Park with scenic trails. ย ย
- Plus the towns of Boscoreale (25,645), Cardito (21,434), Frattamaggiore (28,677), Gragnano (27,420),
- Marigliano (29,496), Poggiomarino (22,803),ย Qualiano (24,799), Volla (25,921).
Find properties for sale in Campania here.
5 things to consider
Donโt immediately rule out the villages with smaller populations, take a look at their locations. Some are less than 15 minutes drive from bigger towns with shops, hospitals etc. They arenโt necessarily in a remote areas, some can be a short drive from the coast and have interesting architecture and a warm and friendly community.
In small Italian villages you are less likely to find Italians that speak English. Therefore. it is important to learn Italian, especially for occasions when you need to deal with local offices and at medical appointments.
While there are a good number of doctors and hospitals across the south, the level of expertise and equipment varies and isnโt considered as high a level as in the northern city of Milan.
What happens after the 10 years needs considering from the start. Itโs worth talking to a tax advisor early on.
