When discussing attractive Italian tax law, people often think of the 300,000 euro flat tax, designed for major fortunes. But Italy reserves another scheme, far less known, and particularly suited to foreign retirees: a unique 7% rate on all foreign-source income, for 10 years, by settling in a southern municipality. Sardinia is part of it. Here’s the breakdown.
In summary
The 7% tax regime (article 24-ter of the TUIR) allows foreign retirees to pay a unique 7% rate on all their foreign-source income, for 10 years.
You must settle in a southern Italian municipality of fewer than 30,000 inhabitants, virtually all Sardinia is eligible, except Cagliari, Sassari and Olbia.
The 2026 expansion raised the population threshold to 30,000 inhabitants: nearly 75 additional municipalities became eligible, with significantly improved infrastructure and services.
A Scheme Designed to Repopulate the South
Introduced in 2019 by article 24-ter of the TUIR, the 7% regime pursues a dual objective: attract to Italy a population of foreign retirees with high purchasing power, and revitalize southern municipalities facing demographic decline.
The principle: a foreign retiree who transfers their tax residence to an eligible municipality in southern Italy benefits from a unique 7% rate on all their foreign-source income : pension, dividends, interest, rents, capital gains.
No progressivity, no ceiling. A 50,000 euros annual retirement generates 3,500 euros in Italian tax. A comfortable 200,000 euro pension, supplemented by 100,000 euros in foreign securities income: 21,000 euros total. Compare this to French or Belgian regimes on the same base.
Conditions to Meet
The regime is exclusively for individuals who:
Receive a pension from a foreign organization (general scheme, supplementary scheme, private pension fund).
Have not been Italian tax residents for the five years preceding the transfer.
Transfer their residence to an eligible municipality, that is, located in one of eight southern Italian regions, and counting fewer than 30,000 inhabitants since the expansion under law 34/2026.
Eligible Regions
Eight southern regions are eligible: Sardinia, Sicily, Calabria, Apulia, Basilicata, Campania, Molise and Abruzzo. Added to this base are certain municipalities in the Marches, Umbria and Lazio affected by the 2016 earthquakes.
The 2026 expansion raised the population threshold from 20,000 to 30,000 inhabitants, a structural change. Nearly 75 additional municipalities became eligible, with a level of infrastructure and services notably more comfortable than previous ones.
Sardinia: Particularly Suited Terrain
All Sardinian municipalities under 30,000 inhabitants are eligible, virtually the entire territory except Cagliari (capital, approximately 150,000 inhabitants), Sassari and Olbia. This configuration opens an exceptionally broad hunting ground, covering some of the island’s most sought-after destinations.
| Municipality | Population | Profile |
|---|---|---|
| Villasimius | ≈ 3,700 inh. | Southeast coast, beaches |
| Pula | ≈ 7,600 inh. | Southwest, Roman ruins |
| Costa Rei (Muravera) | ≈ 5,100 inh. | Southeast coast, seaside |
| Bosa | ≈ 7,600 inh. | West coast, historic village |
| San Teodoro | ≈ 5,200 inh. | Northeast, Costa Smeralda |
| Alghero | ≈ 44,000 inh. | Not eligible (> 30,000) |
Concretely: Cagliari itself is excluded, but neighboring municipalities on the southern periphery, Pula, Villasimius remain within 30 minutes or less of the capital. For those wishing to combine residence in an eligible municipality with easy access to urban services, the configuration is rare.
What the Regime Covers and What It Doesn’t
The 7% rate applies to all foreign-source income, without category distinction:
- Retirement pensions, whether public or private.
- Dividends and interest received on foreign accounts or portfolios.
- Rental income from real estate located abroad.
- Securities and real estate capital gains realized outside Italy.
Unlike the new residents regime (24-bis), the 7% regime covers qualified securities gains from year one, a notable advantage for profiles anticipating significant sales.
Conversely, like any flat-rate regime, it applies only to foreign-source income. Italian-source income remains subject to classical IRPEF.
An Articulation to Know with the Franco-Italian Convention
For French retirees, one point merits particular attention. The Franco-Italian tax convention provides for shared taxation of general social security pensions and mandatory supplementary schemes (Agirc-Arrco). Concretely, France retains a right to tax these pensions, at 20% from the first euro for expatriates.
The tax credit mechanism prevents double taxation, but it limits the 7% rate effect on this specific income category. Pensions from foreign civil service, private pensions and other investment income are not subject to this sharing and fully benefit from the flat rate.
This subtlety does not disqualify the regime, it simply invites personalized calculation depending on your income composition.
Duration and Formalities
The regime applies for a maximum of 10 consecutive years from the first year of option. It ends automatically upon transfer outside Italy or failure to pay the flat tax.
To activate the regime, several steps:
- Effectively establish residence in an eligible municipality (cambio di residenza with city hall).
- Subscribe to the option in the first Italian tax return (Redditi model), to be filed before September 30 of the year following the transfer.
- Pay the flat tax in two installments: 40% in June, 60% in November.
7% Regime or 300,000€ Flat Tax: Which to Choose?
The two regimes are incompatible. For most profiles, the choice is based on a simple threshold: if your annual foreign income exceeds 4.3 million euros, the 300,000 euro flat tax becomes mathematically more advantageous. Below that, the 7% regime offers a better effective rate.
| Criterion | 7% Regime (24-ter) | 300,000€ Flat Tax (24-bis) |
|---|---|---|
| Target audience | Foreign retirees | All HNWI profiles |
| Years abroad required | 5 years | 9 of 10 years |
| Duration | 10 years | 15 years |
| Location | South, < 30,000 inh. | All Italy |
| Qualified capital gains | Covered from year 1 | Outside regime first 5 years |
OGGI Support
The 7% regime offers an exceptional tax framework, but imposes constrained location choice. This is precisely where the trade-off between living environment and optimization plays out: finding property that combines municipality eligibility, local real estate market quality, and access to services and air transport.
At OGGI, Murielle and Gérard structure their searches by integrating this dual dimension from the first meeting. Their knowledge of south island, Villasimius, Pula, Costa Rei, but also inland villages less exposed which allows them to present expatriation candidates with an array combining tax eligibility and patrimonial quality.
In Summary
The 7% regime constitutes, for foreign retirees, one of Europe’s most competitive tax schemes for income up to 4 million euros annually. Its application zone, southern Italy, precisely aligns with territories where Sardinia offers some of Mediterranean’s finest real estate.
The 2026 expansion of the population threshold considerably expanded the eligible supply. For those considering patrimonial expatriation around retirement, the Sardinia-tax-living environment equation has never been more coherent.
Frequently Asked Questions About the 7% Regime
Can I Keep My House in France if I Settle in Sardinia to Benefit from the Regime?
Yes, you can keep your French property, it will become a secondary residence under French law. But watch the regime’s central criterion: Italy must become your primary tax residence, requiring you to live there over 183 days per year and have your center of interests there. Poor time distribution between the two countries can invite challenge from Italian or French tax authorities.
Are My French Social Security Pensions Really Subject to the 7% Rate?
It’s more subtle. The Franco-Italian convention provides that general scheme and Agirc-Arrco pensions remain taxable in France at 20%. You then benefit from a tax credit in Italy to prevent double taxation. However, private pensions, dividends, interest and foreign capital gains fully benefit from the 7% rate. Personalized calculation is essential to estimate real gain per your profile.
What Happens After 10 Years ?
Upon regime expiration, you automatically shift to the classical Italian tax regime: progressive IRPEF schedule up to 43%, IVIE and IVAFE wealth taxes on foreign assets, classical succession taxation. Many beneficiaries anticipate this exit by restructuring wealth during the regime, or contemplating return to their home country or another jurisdiction.
Why Isn’t Cagliari Eligible When It’s Sardinia’s Capital ?
The regime excludes municipalities over 30,000 inhabitants, Cagliari counts nearly 150,000. But this is precisely what makes the south of the island interesting: Pula, Villasimius, or peripheral Quartu Sant’Elena offer comparable living environment, 15 or 30 minutes from Cagliari, with easy access to its international airport, hospitals and services. Proximity without constraint.
What Pitfalls Should I Avoid Before Activating the Regime?
Three main ones. First, not having sufficient regular foreign income, the regime loses interest for essentially French income. Next, underestimating practical constraints of small-town life (health, transport, services). Finally, not anticipating the post-10-year exit, which can generate tax shock if unprepared. This is precisely where structured support makes a difference.
This article is informational in nature. It constitutes neither tax advice nor legal advice. For any decision relating to tax residence transfer, we recommend consulting a tax lawyer specialized in international mobility.
