Retirement can offer a second season of life, defined by a gentler pace, quiet seaside months outside peak season, and lower day-to-day living costs.
While Europe is showing less enthusiasm for the so-called “Portugal model”, Italy is shifting its focus southwards. Incentives are increasingly centred on smaller towns, which are drawing growing interest from abroad. Amid baroque-adorned villages and coastlines that remain relatively affordable, regions such as Sicily continue to rank highly among those planning a move after leaving the workforce.
Let’s explore why Sicily is proving so appealing and what advantages are available to retirees who choose to relocate there.
What benefits are available to retirees?
Italy offers a range of incentives for people who choose to relocate after retirement, particularly when they move to small towns or areas facing population decline. These incentives are primarily tax-related and are set out in Article 24-ter of the TUIR (the Consolidated Income Tax Act).
Where it pays to live in Italy as a retiree
Affordability is influenced by more than just the tax regime. For many retirees, the decision about where to live after leaving work is based on a wider balance of factors, including the cost of living, availability of services, property prices and rents, climate, and how easy it is to integrate into a local community, particularly in smaller towns.
With this in mind, certain parts of Italy remain more affordable than others, especially areas outside the major cities and regions under strong pressure from the property market.
Among the regions most often considered are:
- Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise and Apulia. In municipalities with fewer than 20,000 residents, retirees may benefit from a favourable tax regime, under which foreign pension income is taxed at a flat rate of 7 per cent.
- In addition, some municipalities in central Italy affected by the earthquakes in Abruzzo, Marche, Umbria and Lazio have since been included in an extension of the same scheme.
Why Sicily pays off
The Mediterranean’s largest island, covering an impressive 25,426 square kilometers, concentrates in a relatively compact and varied space conditions that directly affect the quality of life after work.
In small towns, the social fabric is less fragmented: relationships are more stable and recognizable, which facilitates the integration of new residents better than in denser urban areas. In addition, the climate allows outdoor living for much of the year, while the sea, countryside and hills remain accessible without long commutes.
For those moving into retirement, the house to live in is no longer a place of passage, but the comfortable space in which to weave more stable relationships.Added to this is a real estate market that, in small towns, still offers affordable buying margins and, in some cases, initiatives such as 1-euro homes with a renovation bond. For those who dream of the sea, there is no shortage of urban centers such as Cefalù e Marzamemi, while those who prefer the hills look to small villages such as Castelmola, Forza d’Agrò and Erice. There is no shortage of solutions for a “buen retiro” in locations accessible only by sea, such as Ginostra among the favorite natural sets of international film productions.
How the benefits work for retirees looking to move to Sicily
This tax regime is aimed at pensioners with income from foreign sources who transfer their tax residence to Italy. The relevant legal provision is Article 24-ter of the Italian Income Tax Code (TUIR), introduced by the 2019 Budget Law. It provides for a flat substitute tax of 7 per cent on all income generated abroad, including pensions, for a maximum period of ten years.
To qualify, individuals must move their residence to a municipality with fewer than 20,000 inhabitants located in an eligible region and must not have been tax resident in Italy during the previous five tax years.
Alongside the national regime, Sicily has pursued a form of “development–oriented taxation” linked to its special autonomous status. The intention is to introduce tax relief measures, such as reductions or exemptions on regional taxes (including the regional IRPEF surcharge and IRAP), drawing inspiration from international models. The exact scope of these incentives, however, depends on regional implementing rules and is not automatically the same for all applicants.
In practice, the 7 per cent tax regime represents the concrete and currently available basis for planning a move, while the additional regional measures announced by Sicily, inspired by the so-called “Portugal model”, are still in the process of being implemented.
*Article translated by Agnese Giardini
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