April 2026 update
The population threshold for eligible municipalities is increased from 20,000 to 30,000 residents. Article 26 of Law No. 34 of March 11, 2026—the SME Law—amends Article 24-ter of the Italian Tax Code by expanding the scope of eligible territories to Comuni (municipal authorities). This amendment opens the 7% Regime scheme to medium-sized urban centers that were previously excluded. This will include larger urban centres, particularly those with better transport connections and urban infrastructure in coastal areas, which have more developed infrastructure compared to small villages. The size extension applies to both municipalities in Italy’s “Mezzogiorno” (Southern Regions) and to earthquake impacted areas in Lazio, Marche and Umbria.
The change is expressed to come apply from 7 April 2026. It is not yet clear exactly when the change will come into effect and in particular whether it will apply to
- anyone registering as resident for the first time in Italy on or after 7 April 2026
- anyone who is tax resident in Italy for FY 2026
- anyone who is tax resident in Italy starting from FY 2027
Before official guidance is issued by the Tax Agency caution should be exercised by those selecting a Comune with more than 20,000 (but less than 30,000) inhabitants transferring tax residence to Italy for FY 2026.
Legislation
In Article 24-ter, paragraph 1, of the Consolidated Income Tax Law, referred to in the Decree of the President of the Republic of December 22, December 1986, No. 917, the words: “20,000 inhabitants” are replaced by the following: “30,000 inhabitants”.
The revised wording of Article 24-bis, now reads:
"individuals who receive pension income as referred to in Article 49(2)(a) from foreign entities and who transfer their residence to Italy pursuant to Article 2(2) to one of the municipalities located in the regions of Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, and Puglia, or to one of the municipalities listed in Annexes 1, 2, and 2-bis to Decree-Law No. 189 of October 17, 2016, No. 189, converted, with amendments, by Law No. 229 of December 15, 2016, or in one of the municipalities affected by the earthquakes of April 6, 2009, provided that the population does not exceed 30,000 inhabitants, may opt to subject income of any category, generated abroad, identified in accordance with the criteria set forth in Article 165, paragraph 2, to a substitute tax, calculated on a flat-rate basis, at a rate of 7 percent for each tax period during which the option is valid."