According to Open4business, Italy is preparing a new tax regime for citizens of the country who have lived abroad for a long time and wish to return home after retirement.
The essence of the initiative is the introduction of a favourable rate of 4% on global income for Italian pensioners-emigrants returning to the country. The new regime should become a separate instrument of the tax policy of Rome and the first, which is directly targeted at the owners of Italian pensions.
Italy now already has several favourable regimes for new residents, including a scheme for wealthy foreigners and a 7% regime for foreign pensioners moving to certain small municipalities in the south of the country. However, these mechanisms have not fully covered the situation of Italians who have worked and lived abroad for decades and then want to return to Italy to retire.
In the current scheme for foreign pensioners, a 7% rate applies to foreign income if the person transfers tax residency to Italy and moves to the relevant municipality. In 2026, Italy extended this regime: the population limit for participating municipalities was raised from 20,000 to 30,000 inhabitants, opening up access to benefits for new towns in the south of the country.
The new 4% regime may become a more targeted measure for Italian citizens abroad. The authorities expect that it will help to bring back to the country a part of pensioners who have income and savings outside Italy, but maintain personal, family or cultural ties with their homeland. For the state, it is also a way to support smaller towns and regions that are facing an ageing population and an exodus of residents.
For the property market, such an initiative could strengthen demand for housing in small towns and southern Italian regions. Returning retirees are more likely to focus not on Milan or Rome, but on more affordable places with low cost of living, good climate, medical infrastructure and the possibility of quiet living. This can support the market for secondary housing, long-term rentals and services for older residents.
Italy has been actively using tax incentives in recent years as a tool to attract capital and new residents. At the same time, the authorities are reviewing incentives for ultra-wealthy foreigners: earlier they discussed increasing the flat tax on foreign income for new wealthy residents from 200,000 Euros to 300,000 Euros per year.