Italy lures the wealthy with a €200,000 flat tax on all foreign income and pensioners with 7 percent in the south. In between lies a country with affordable property, high VAT and a bureaucracy that needs patience.
The short answer
Attractive for pensioners in the south and the wealthy, normal for employees. Property outside Milan cheap, rental yields solid.
milinia’s take
- Pensioner regime: 7 percent flat tax on all foreign income for ten years in municipalities under 20,000 inhabitants in the south.
- Impatriati rule: 50 percent of employment income tax-free for five years on arrival with a qualified job.
- Flat tax for the wealthy: €200,000 a year on all foreign income regardless of amount.
- Property purchase: 2 percent transfer tax for a main residence, 9 percent for a second home, each on the cadastral value.
Living and costs
Italy sits 15 percent below Germany with a north-south divide of 40 percent. Milan is as dear as Munich, a one-bedroom flat in the centre costs €1,400, Rome €1,150, Bologna €900, Palermo €550, Lecce €500. Groceries and restaurants are cheaper, fuel and electricity dearer than in Germany.
Taxes
IRPEF has three bands up to 43 percent plus regional and municipal surcharges of up to 3.3 percent. Three special regimes make Italy interesting: the impatriati rule exempts 50 percent of employment income up to €600,000 for five years, 60 percent with a child. The pensioner regime taxes all foreign income, including the German pension, rents and capital gains, at 7 percent for ten years if you move to a municipality under 20,000 inhabitants in southern Italy or on the islands. The flat tax for the wealthy replaces all taxes on foreign income with €200,000 a year, €25,000 for family members. Capital gains 26 percent, government bonds 12.5. Wealth tax only on foreign assets at 0.2 percent (IVAFE) and foreign property at 1.06 percent (IVIE).
Property
Milan €5,500 per square metre, Rome €3,900, Florence €4,300, Bologna €3,500, Naples €2,700, Apulia and Calabria under €1,500. Transfer tax is levied on the cadastral value, often only half the price: 2 percent for a main residence, 9 percent for second homes. Notary around 2 percent. Rental yields 4 to 5 percent, more in holiday regions with short-term lets, since 2024 with registration duty and a 21 to 26 percent flat tax on rents (cedolare secca).
Gold, portfolio, bank
Investment gold VAT-free, but purchases above €5,000 are reported to the tax authority. Foreign portfolios must be declared annually in form RW. Italian banks charge account fees and an annual €34 stamp duty on accounts above €5,000.
What emigrants underestimate
The bureaucracy with codice fiscale, residenza and SPID identity, inheritance tax with only one million euros of allowance per child but a low 4 percent above, and the municipal IMU tax on second homes of around 1 percent of the cadastral value a year.
Try it yourself
Travel Budget CalculatorCountry, days, people, style: your daily budget and travel fund, with buffer and cash share.Income Tax CalculatorEnter taxable income, read off tax, marginal rate and average rate, with joint assessment.Frequently asked questions
Where does the 7 percent regime for pensioners apply?
In municipalities under 20,000 inhabitants in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, Apulia and some earthquake municipalities in central Italy.
How high is inheritance tax?
4 percent for spouses and children with a one million euro allowance per heir, 6 percent for siblings, 8 percent for others.
Can I buy a house for one euro?
The one-euro houses in depopulated villages require renovation within three years with a deposit. Realistically the renovation costs €50,000 to €150,000.
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