Greece and Italy’s 7% Flat Tax Regimes for Retirees

Why These 7% Regimes Get So Much Attention

The attraction is the gap between 7% and the ordinary rates. From tax year 2026, Greece taxes wages, pensions and business income on a scale that starts at 9% and reaches 44% above €60,000⁶. Italy’s 2026 national rates are 23% up to €28,000, 33% from €28,000 to €50,000 and 43% above⁷.

A simplified example, not a tax calculation: it leaves out deductions, credits, treaty rules and U.S. tax. It shows the size of the gap, not your bill. Dollar figures at €1 = $1.1367 (ECB, September 24, 2026)⁸.

For a retiree living on Social Security, a private pension, IRA withdrawals, rents or dividends, that gap explains the interest. But the rate is only the first question. The others are whether the regime applies to you, which of your income it covers, how the United States treats the same income, where you must live, how long the regime lasts and what happens when it ends. Have a cross-border tax adviser check your exact income, citizenship, pension types, treaty position and timing before you choose.

Greece vs Italy at a Glance

How Greece’s 7% Regime Works

Article 5B of the Greek Income Tax Code, re-stated in full by Law 5313/2026, lets a person who receives a foreign pension and transfers tax residence to Greece pay tax at a flat 7% on the whole of the income they earn abroad, each year, for 15 tax years¹. Two conditions apply: you were not a Greek tax resident in five of the six years before the move, and you move from a country that has an agreement on administrative cooperation in tax matters with Greece¹.

What changed in June 2026

• The fixed statutory deadline to apply “by March 31” of each tax year was deleted; the tax authority (AADE) now sets the deadline by decision¹. On September 25, 2026 we found no new AADE decision setting the deadline for article 5B, so check the current date with AADE or a Greek tax adviser before relying on one.
• The 7% is now paid in one installment by the last working day of December¹.

What to confirm for an American

We could not find an official Greek list confirming that the United States counts as a country with an administrative-cooperation agreement for article 5B. The 1950 U.S.–Greece tax treaty does contain an exchange-of-information article⁹, but ask a Greek tax adviser to confirm before you rely on the regime.

We also found no official Greek guidance on whether U.S. Social Security counts as foreign pension income for article 5B, and the U.S.–Greece treaty does not mention Social Security⁹. If Social Security is your main pension, confirm this with AADE or a Greek tax adviser first.

The tax regime is separate from the right to live in Greece. The permit built for retirees and people living on their own income is the financially independent person permit: at least €3,500 a month net, plus 20% for a spouse and 15% per child¹⁰, and no work or business activity of any kind in Greece¹¹.

Greece needs caution if…

• You do not want to become a Greek tax resident: the regime exists for people who transfer their tax residence to Greece¹.
• U.S. Social Security is your main pension, because of the open question above.
• Your income mix is complex: the 7% applies to all income earned abroad¹, so rents, dividends and withdrawals all need to be mapped with your adviser.
• You need specialized healthcare nearby: island and rural services differ from those in Athens or Thessaloniki.

Our Greece page covers residence routes, costs and taxes in one place, and the Greece Relocation Guide turns them into checklists.

How Italy’s 7% Regime Works

Article 24-ter of Italy’s income tax code (TUIR) lets people who receive pensions from abroad and transfer their tax residence to a town covered by the regime pay a 7% substitute tax on foreign income of any category, not only the pension². The conditions:

• The town. A municipality of no more than 30,000 inhabitants, either in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Apulia, or among the municipalities listed in annexes 1, 2 and 2-bis of Decree-Law 189/2016 (the 2016 central Italy earthquakes) or hit by the April 6, 2009 earthquake². The cap was 20,000 inhabitants until Law 34/2026 raised it to 30,000, effective April 7, 2026^2,3.
• Prior non-residence. You were not an Italian tax resident in the five tax years before the move².
• Where you come from. A country with which Italy has administrative-cooperation agreements². The Agenzia delle Entrate’s 2026 return instructions say this includes, besides European countries, every country with a tax treaty with Italy¹²; the United States has one¹³.
• How to opt in. In the Italian tax return for the year you transfer residence².
• Duration. The year of the move and the following nine tax years².

You can also leave income from specific countries out of the regime and have it taxed normally, with a credit for foreign tax on that income².

Paying, reporting and losing the regime

• The 7% is paid in one installment by the deadline for the income tax balance, and it cannot be deducted from any other tax².
• When you opt in, you name the country or countries where you were last tax resident, and the Agenzia delle Entrate passes that information to their tax authorities².
• The option stops having effect if its conditions stop being met, or if the tax is not paid in full on time (unless it is paid by the balance deadline of the following year, with penalties and interest)². From the second year of the option, a move to another town in the listed regions keeps it, provided that town also meets the population rule; a move to an Italian town that is not covered, or abroad, ends it¹².
• You can revoke the option, but revoking it, or losing it, rules out opting in again².
• For the years the option applies, you do not file Italy’s foreign-asset report (the RW schedule) and do not pay IVIE or IVAFE, Italy’s taxes on foreign real estate and foreign financial assets. This comes from Law 145/2018, article 1, paragraph 274, which we read on Normattiva in its text in force from August 8, 2026¹⁴. Because the paragraph refers to article 24-ter, ask your adviser how it applies once the regime moves to article 247 in 2027.

Italy needs caution if…

• You only want Rome, Milan or Florence. None is in the eight regions, and each has far more than 30,000 inhabitants: about 2,745,000, 1,363,000 and 362,000 on January 1, 2026, by ISTAT’s estimate^2,15.
• You picture a southern city. Naples (905,050), Palermo (626,273), Cagliari (145,981) and Lecce (94,387) are all above the cap on the same ISTAT estimate¹⁵.
• You want simple administration or English-speaking services everywhere.
• Your healthcare needs a big-city hospital network.

The 2027 code change

Legislative Decree 117 of June 19, 2026 approves a new consolidated income tax code that applies from January 1, 2027 and repeals the current TUIR, including article 24-ter^2,4. The regime continues as article 247 of the new code, with the 7% rate and the 30,000-inhabitant cap⁴. Anyone planning a move for 2027 should expect advisers and forms to cite the new article number.

As in Greece, the regime does not give you the right to live in Italy. The visa built for people living on passive income is the elective residence visa: about €31,000 a year per person according to the New York consulate, from income that does not come from work, and no work of any kind is allowed^16,17.

The U.S. Tax Problem Does Not Disappear

U.S. citizens are taxed on worldwide income wherever they live⁵. A 7% tax in Greece or Italy is a foreign tax; the U.S. foreign tax credit may offset foreign income tax paid on the same income, within its limits; ask a U.S. adviser whether the 7% tax qualifies¹⁸. The treaties matter too, and they are not the same:

Because the details turn on your citizenship, the type of account and the timing of withdrawals, have a U.S. international tax adviser and a Greek or Italian adviser look at your income together. Our sister site eTaxNexus compares the foreign tax credit and the FEIE.

Social Security, Pensions, IRAs and Investment Income

A U.S. retiree rarely has one kind of income. Social Security, a private or public pension, IRA and 401(k) withdrawals, a Roth IRA, rents from a U.S. property, dividends and interest can each be treated differently by U.S. law, by Greek or Italian law and by the treaty. Both 7% regimes reach well beyond the pension itself: Greece’s covers all income earned abroad¹ and Italy’s covers foreign income of any category². Beyond the retirement income in the table above, two more lines often matter:

A retiree with one simple pension faces a different analysis from one with several accounts, rental property, a brokerage account and U.S. state tax questions. Ask your U.S. adviser, too, whether your former state still treats you as a resident: state rules are separate from federal ones and are not covered here.

The Tax Regime Is Not the Lifestyle

1. Greece allows any location. That gives you a free choice between Athens, Thessaloniki, Crete, the Peloponnese and the islands¹; choose by healthcare access, airport links and winter life.
2. Italy requires living in a covered town. The town must work for daily life, healthcare, transport and community, not only for tax².
3. Healthcare belongs in the tax decision. A low rate does not help if the care you need is hours away.
4. Winter matters. Visit outside the summer season before you commit.

Common Mistakes Americans Make

1. Treating 7% as the total tax bill

U.S. tax on worldwide income continues⁵; the foreign tax credit has limits¹⁸.

2. Using out-of-date rules

Older guides may still say 20,000 inhabitants for Italy; the cap is 30,000 since April 7, 2026³. They may also give Greece’s March 31 deadline, which was deleted in June 2026¹.

3. Picking an Italian town for tax only

You must actually live there for the regime to make sense. Check the town’s population and region with your adviser before you sign a lease.

4. Assuming every retirement account is treated the same

Social Security, private pensions, IRAs and government pensions follow different treaty rules^9,13.

5. Moving before checking tax residence timing

Tax residence is a legal test, not a feeling. Italy treats you as resident if, for most of the tax year and counting fractions of a day, you have your residence or domicile there or are present there, and registration with the population register creates a presumption of residence²⁴. The Italian option is claimed in the tax return for the year you move², so the date of the move decides your first regime year. Ask a Greek adviser the same question about Greece before you book the move.

6. Choosing Greece without checking healthcare access

Islands and rural areas differ. Check hospitals, specialists, pharmacies, private clinics and winter services before you decide; our healthcare guide lists the questions.

7. Forgetting what happens after the regime ends

Greece’s regime lasts 15 tax years¹ and Italy’s 10². Plan for ordinary taxation afterwards, at the rates shown at the top of this article^6,7.

8. Relying on the plan before professionals review it

Both regimes changed in 2026^1,3, and Italy’s moves to a new code in 2027⁴. Have the plan reviewed by a U.S. international tax adviser and a Greek or Italian tax professional before you rely on it.

Which Regime Fits You Better?

Greece may suit you if…

• You want to choose freely where to live in the country¹.
• You want the longer period: 15 tax years¹.
• You can meet the financially independent person test of €3,500 a month net¹⁰.

Italy may suit you if…

• You genuinely want small-town life in the South or the listed earthquake areas².
• You have foreign income beyond your pension that would also fall under the 7%².
• You can meet the elective residence income benchmark¹⁶.

The better regime is not automatically the one that lasts longer or sounds simpler. Ask where you can live legally, safely, affordably and happily once the tax analysis is done. Our Italy page covers the elective residence visa and daily costs, and the Italy Relocation Guide adds the checklists.

Our sister site Financial Finest looks at the savings side in retiring in Europe on U.S. savings.