How Much Money Do You Need to Retire in Italy?

Retiring in Italy offers a blend of cultural heritage, diverse landscapes, and a celebrated lifestyle, drawing many to its cuisine, historical cities, and temperate climate. Understanding the financial landscape is a practical step, including daily expenses, housing, healthcare, residency prerequisites, and tax obligations.

Understanding Core Living Expenses

Daily living expenses in Italy vary by lifestyle and location. Major urban centers have higher costs, while smaller towns and rural areas are more economical. A household might anticipate average monthly expenses around €2,728. Retirees in modest towns might live on €2,000 to €2,500 per month.

Grocery costs are generally more affordable. Utilities are among the higher in the EU, with monthly expenses from €120 to €310. Water bills vary regionally, for instance, from €181 annually in Molise to €770 in Tuscany.

Public transportation is widely available and cost-effective. A typical monthly pass might cost under €40.

Dining out and entertainment offer accessible price points. A meal at a local trattoria could be around €15.

Housing and Healthcare Costs

Housing costs are influenced by location and property type. Renting a one-bedroom apartment in major cities like Milan, Rome, or Florence typically ranges from €1,100 to €1,800 per month. Smaller cities and rural areas, such as Sicily, offer more affordable options, with one-bedroom apartments ranging from €400 to €800 per month. Nationwide, the average monthly rent for a two-bedroom apartment is approximately €1,040.

Purchasing property involves the sale price plus various fees and taxes. The average asking price for residential properties was about €2,104 per square meter, with significant regional differences. For example, property in Milan might cost between €5,000 and €8,000 per square meter, whereas in Calabria, it could be as low as €948 per square meter. Additional costs can add 10% to 20% to the total, encompassing registration tax, Value Added Tax, notary fees, and real estate agent commissions.

Healthcare is an important financial aspect. While Italy has a public National Health Service (SSN), non-European Union citizens typically need private health insurance for their initial visa period. Non-EU citizens may voluntarily enroll in the SSN for an annual fee of €2,000. Even with public coverage, co-payments for specialist visits or diagnostic tests can range from €10 to €40. Private health insurance generally costs between €1,300 and €2,500 annually for comprehensive plans, though basic policies can be found for €350 to €600 per year.

Financial Requirements for Residency

For non-working retirees, the Elective Residency Visa (ERV) is the most common pathway to long-term residency. This visa requires applicants to demonstrate a stable, passive income not derived from employment.

For a single applicant, the minimum passive income requirement is €31,000 to €32,000 per year. For a married couple, the combined minimum is €38,000 per year. Some consulates, particularly in higher cost-of-living areas, may require a higher demonstrated income, up to €50,000 or €60,000, or may expect each applicant in a couple to meet the individual threshold. An additional 20% of the single person’s requirement is added for each dependent child.

Acceptable sources for passive income include pensions, investment revenues, long-term rental income, trust funds, and guaranteed annuities. To prove these means, applicants must submit verifiable documentation such as bank statements, pension records, rental contracts, investment portfolio statements, and tax returns. Applicants must also demonstrate stable accommodation in Italy, which can be a registered lease agreement or a property deed; hotel bookings are not accepted. Comprehensive private health insurance, covering at least €30,000 in medical expenses, is a mandatory requirement.

Tax Considerations for Retirees

Establishing tax residency in Italy occurs if an individual resides in the country for more than 183 days or registers their legal residence with the local municipal registry office (Anagrafe). Once a tax resident, an individual is subject to Italian taxation on their worldwide income. The standard Italian income tax, IRPEF, operates on a progressive scale.

For 2025, IRPEF rates are: 23% for income up to €15,000, 25% for income between €15,001 and €28,000, 35% for income over €28,000, and 43% for income above €50,000. Regional surcharges (1.23% to 3.33%) and municipal surcharges also apply. However, due to tax credits and a “no tax area,” individuals with low incomes, typically under €10,000, may pay little to no income tax.

A notable tax incentive for foreign retirees is the 7% flat tax regime. This regime applies to individuals who receive a foreign pension and have not been Italian tax residents for the preceding five tax years. To qualify, retirees must establish official residence in a municipality with fewer than 20,000 inhabitants located in one of the designated southern Italian regions: Abruzzo, Apulia, Basilicata, Calabria, Campania, Molise, Sardinia, and Sicily. Under this regime, all foreign-sourced income, including pensions, dividends, interest, rental income, and capital gains, is taxed at a flat rate of 7% for up to ten years. This regime also offers exemption from certain wealth taxes and fiscal monitoring obligations related to foreign-held assets.

Property owners in Italy are subject to annual property taxes. The IMU is a municipal tax typically exempt for primary residences unless classified as luxury properties. For second homes or luxury properties, IMU rates range from 0.4% to 1.06% of the property’s cadastral value, varying by municipality. Payments are typically made in two installments, due by June 16 and December 16 each year. Additionally, the TARI is levied based on the property’s size and the number of residents, with payment schedules set by individual municipalities.

Italy also imposes inheritance and gift taxes, with rates and exemptions depending on the relationship between the donor/deceased and the beneficiary. For a spouse or direct descendants (children), the tax rate is 4%, with a tax-free allowance of €1 million per beneficiary. Siblings face a 6% rate after a €100,000 exemption, while unrelated parties are taxed at 8% with no tax-free allowance. Recent legislative changes, effective January 1, 2025, allow for separate €1 million exemptions for lifetime gifts and inheritances for direct descendants, potentially doubling the tax-free transfer amount.