Live in Southern Italy With a 7% Flat Tax

A little-known Italian tax break could let qualifying expats enjoy la dolce vita—without increasing their income tax bill.

DAILY POSTCARD  | FRIDAY, MAY 1, 2026 Dear International Living reader, Southern Italy is already one of Europe’s most affordable and enchanting regions—but a little-known tax break could make it even more appealing.  Qualifying expats who settle in select small towns may pay just 7% tax on global income for up to 10 years, while enjoying low costs, coastal beauty, rich culture, and la dolce vita. It’s a rare chance to stretch your retirement income further while living the kind of Italian lifestyle many only dream about. Read on… P.S. International Living’s Global Diversification Expert, Ted Baumann, has paid zero in US income taxes—legally—for 23 years... and counting. He filed his returns. He told the US government exactly what he was doing. Yet he wasn’t required to pay any income tax to Uncle Sam. Click here for more details. Recommended Resource: The System Works… Just Not for You In the world we live in, most people are at the mercy of what Washington and Wall Street send their way. But you don’t have to be. Because there’s another world out there. A world where a savvy group of insiders is quietly capitalizing on opportunities the Average Joe never hears about. They know things you don’t. And I’d like to put your in their good company... Details here. Live in Southern Italy With a 7% Flat Tax By Ted Baumann How’d you like to live in one of the most beautiful and rustic parts of Europe… without having to pay any more income tax than you’re paying right now?  Under the terms of a unique law passed by the Italian government in 2019, you can do just that.  Article 1 (273-274) of Law N.145/2018 says that people who meet the following qualifications can pay a flat tax on their global income of only 7% for up to 10 years after moving to Italy:  They are from a country that has a tax treaty with Italy.  They haven’t been a tax resident of Italy for the last five years.  They settle in southern Italy, in a qualifying municipality with a population of 30,000 or fewer residents: Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, and Puglia. For example, let’s say you’re an American couple who decides to move to Italy on an elective residence visa. You qualify based on your Social Security and private retirement income. You buy a home in a lovely little village on the Mediterranean coast of Sicily. Every year you file Italian taxes listing your income from all sources everywhere in the world. You pay a flat tax of 7% on that income.  But let’s say your tax rate in the US on that same income is 15%. Because the US and Italy have a tax treaty, every cent you pay to Italy generates a credit against your US tax obligations under the foreign tax credit (FTC).   The bottom line is that anybody whose US federal income tax rate is higher than 7% can live in Italy without paying any additional income tax at all!  This is a huge bonus. Italy’s normal tax rates range from 23% to 43%. A 7% tax rate is only one third of the lowest Italian tax bracket! Here’s an example:  Income: $100,000  Italy tax: $7,000 (7%)  US tax (hypothetical): $18,000 You claim $7,000 credit from the IRA and now owe only $11,000 to the US.  Of course, taking advantage of this special tax deal doesn’t limit your ability to access all the great things that Italy offers its citizens, including universal healthcare.  What about other aspects of living in the parts of Italy that are eligible for this tax break?  The biggest draw is cost. Compared to northern Italy or most of Western Europe, everyday expenses are dramatically lower. Rent in smaller towns can be a fraction of what you’d pay in Rome or Milan—sometimes under $600 a month for a good apartment.   Property is even more striking: in parts of Calabria or inland Sicily, habitable homes can cost less than a used car. Groceries, especially locally sourced produce, wine, and olive oil, are inexpensive and high quality, while dining out remains affordable enough to be routine rather than occasional.  But the appeal isn’t just financial. Life moves at a slower pace. These regions are built around community—morning markets, long lunches, and evening walks in the piazza. Coastal areas offer easy access to beaches without the crowds or price tags of more famous destinations, while inland towns provide history and charm.  For the right person, southern Italy delivers something increasingly rare: a high quality of life at a sustainable cost, without sacrificing culture, climate, or cuisine.   Just imagine being able to do all that without paying any extra income tax!  Editor’s Note: I believe that over the decade ahead—if you keep doing what you’re doing today, and you just take what Washington and Wall Street and big business send your way—you’re likely to see your quality of life fall. You won’t live as well 10 years from now as you do today. And I am not the only one who feels this way. That’s why the Forbidden Knowledge I’d like to share with you is so important. Because it gives you a greater measure of control over your own future.  More details here. Recommended Resource: Live Better Overseas—For Less Than You Think As little as $1,689 a month bankrolls a truly good life abroad... which means you could retire comfortably on a social security check alone. Join International Living’s Ultimate Go Overseas Bootcamp September 5–7, 2026 | Tampa, Florida For three full days, our experts will show you where the real opportunities are right now—and how to create your own personalized overseas plan. Special Early Discount Now Available - Save $250. This is the biggest discount you’ll see for a seat at this event. It ends Sunday at midnight. Register Today. 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