The Expat Sage Podcast
Moving, Working, and Investing for Americans Abroad.
Pre-relocation planning advice and investment strategies for American citizens moving abroad.
Discover expert insights and comprehensive strategies for expats on investing in a dual taxation world, managing finances, and planning for retirement.
The Expat Sage Podcast
Move To a Small Town In Southern Italy And Pay 7% On Foreign Income For Ten Years
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Sunlit piazzas and stone facades set the scene, but the real story is a 7% twist: Italy’s Article 24-Ter invites qualifying retirees to settle in select small towns and pay a flat 7% on foreign-sourced income for ten tax years. We unpack how this substitute tax flips Italy’s reputation for high rates and heavy reporting into a targeted opportunity for people willing to trade city bustle for southern charm or a medieval hill town in central “seismic crater” zones.
We break down the essentials: why the pension is the key to entry, how periodic U.S. retirement distributions can qualify, and where popular financial annuities can fail. Then we go deeper into what actually gets the 7%—dividends, capital gains, interest, and even royalties—so long as the income is earned outside Italy. Geography becomes the make-or-break: municipalities under 20,000 in the Mezzogiorno or approved central regions qualify, but ISTAT’s official population snapshot can knock you out if you don’t verify it before you buy. For high net worth listeners, the sleeper benefit is privacy: no IVIE, no IVAFE, and no Quadro RW reporting of foreign accounts for a decade.
American listeners get a tactical map: Social Security remains U.S.-taxed and typically exempt in Italy under the treaty, while the 7% paid to Italy on dividends and interest can often be credited against U.S. tax. The standout play is the Roth IRA: qualified withdrawals are tax-free in the U.S. and taxed at only 7% in Italy under 24-Ter, creating a rare arbitrage window. We also flag the California trap—domicile rules that can chase your worldwide income if you don’t cut ties cleanly. Finally, we talk logistics: visas, private insurance, and affordable SSN buy-in, along with the stark year-11 cliff that demands an exit plan by year eight or nine.
If the idea of funding a slower, richer life while protecting privacy and optimizing taxes sparks your curiosity, this guide gives you the checkpoints, the pitfalls, and the strategy to decide whether a decade at 7% is your next chapter. Enjoy the listen, and if it helps, share it with someone dreaming in Baroque gold. Subscribe for more smart, practical deep dives. If you have questions, contact us.
More info at Italy's 7% Flat Tax Regime for International Retirees.