Italy’s beautiful Italian villages and small towns offer more than just pretty views and great food. If you’re thinking about moving to Italy, choosing a small municipality can save you a lot of money through special tax breaks and cash incentives that the government offers.

How Italy’s Tax Breaks Work for Small Towns

The Italian government wants to bring more people to rural areas that are losing population. To make this happen, they created special tax rules that can save you thousands of euros every year. If you move to a town with fewer than 20,000 people in certain southern regions, you only pay 7% tax on money you earn from outside Italy. This deal lasts for ten years.

This is a huge saving compared to normal Italian taxes, which can go up to 43%. Whether you get pension money, rental income, or earnings from another country, you’ll only pay that low 7% rate. The only catch is that you can’t have lived in Italy as a tax resident for at least five years before moving.

Regions where you can get the 7% tax rate:

• Sicily
• Calabria
• Sardinia
• Campania
• Basilicata
• Abruzzo
• Molise
• Apulia

Cash Payments for Moving to Small Towns

Some small towns will actually pay you money to move there. These aren’t loans, they’re grants you don’t have to pay back. Different towns offer different amounts, but they all want the same thing: for you to live there and help their local economy grow.

Here’s what some towns are offering:

Town/Region	Cash Offer	Requirements
Candela (Puglia)	Up to €2,000	Must rent a house and earn at least €7,500/year
Molise Region	€700/month for 3 years (€25,200 total)	Ages 18–40, must open a business in a town under 2,000 people
Sardinia	€15,000	Must buy or renovate a house in a town under 3,000 people
Calabria	Up to €28,000	Under 40, stay 3+ years, start a business or bring professional skills

These programs require you to actually contribute to the community. Most want you to start a business or bring a skill that helps the town. This might sound hard, but it actually helps you build income while you’re getting financial support.

Much Cheaper Housing and Daily Costs

One of the biggest benefits of small municipalities in Italy is how much less expensive everything is. Houses in small towns cost a fraction of what you’d pay in big cities like Rome or Milan.

Property price comparison:

• Big city centers (Rome, Milan): €6,000 per square meter
• Small towns (Marche, Abruzzo, Umbria): €1,000–€1,180 per square meter
• Small Tuscan towns: €1,800–€2,300 per square meter

This means if you have €100,000 to spend on a house, you could buy about 17 square meters (183 sq ft) in Milan, but 85–100 square meters (915–1,076 sq ft) in a small town in Abruzzo. That’s the difference between a tiny studio and a nice-sized house.

Your everyday expenses are also much lower. Food from local markets costs less than city supermarkets. Municipal taxes are reduced. Utility bills are smaller. Plus, many towns give newcomers extra tax credits on things like waste disposal and water bills.

Starting a Business With Government Support

Most of these programs want you to open a business, which might seem scary at first. But small towns make it easier and cheaper to start a business than big cities do. You’ll pay less for rent or buying a shop space, you won’t have much competition, and the town government often helps you get started.

Popular business ideas that work well:

• Tourist accommodations (bed and breakfasts, vacation rentals)
• Restaurants or cafes featuring local food
• Tour guide services
• Shops selling local products (cheese, wine, crafts)
• Remote work services (if you already have online clients)

Towns like Santa Fiora have installed super-fast internet specifically for remote workers. This means you can keep your job online for a company in another country, earn that salary, pay only 7% tax, and live somewhere beautiful with low costs.

Lifestyle and Quality of Life Benefits

Small Italian municipalities don’t just save you money, they also offer a better way of life. You’ll enjoy:

• A slower pace of living with less stress and more free time.
• Stronger community ties, where neighbors know and help each other.
• Healthier living, with fresh produce from local farms and markets.
• Rich cultural life, from festivals and traditions to historical landmarks.
• Access to nature, whether mountains, beaches, or rolling countryside.

Many small towns are just an hour or two from larger cities, so you get peace and affordability without losing access to major airports or hospitals.

Immigration and Visa Considerations

These incentives pair especially well with Italian visa programs.

• Elective Residence Visa: Ideal for retirees with passive income or pensions. Combine this with the 7% tax rate, and you can live comfortably at a low cost.
• Self-Employment Visa: Fits those who want to open a small business in town. Grants and lower startup costs make it much easier to qualify.
• EU Citizens: Moving is even simpler, no special visas are required, only residency registration.

Long-Term Investment Potential

Beyond lifestyle and immediate savings, buying property in a small Italian town can be a smart long-term investment.

• Properties are undervalued compared to cities, meaning strong appreciation potential as regions revive.
• Many towns and the Italian state offer renovation bonuses and tax credits for restoring old houses, further reducing your costs.
• A home in Italy can also serve as a base for future generations — a family asset that grows in value.

Your Money Goes Further Over Time

When you add up all these benefits together, the financial advantages are impressive. Let’s look at a simple example:

Expense Category	Big City (Annual)	Small Town (Annual)	Your Savings
Taxes on €30,000 foreign income	€10,000+	€2,100	€7,900
Rent/Mortgage	€15,000	€6,000	€9,000
Daily expenses	€12,000	€8,000	€4,000
Total Annual Savings			€20,900

Over ten years (the length of the tax benefit), you could save over €200,000 just from these differences. That doesn’t even count the cash grants some towns give you when you arrive.

For retired people, these benefits are even better. Imagine you get €2,500 monthly from a foreign pension (€30,000 yearly). Under normal Italian taxes, you might pay €10,000 in taxes. With the 7% rate, you only pay €2,100, saving €7,900 every single year.

What You Need to Do

Getting these benefits isn’t automatic, but the process is straightforward. Here’s what most programs require:

For tax benefits:

• Haven’t lived in Italy for the past 5 years
• Move to a town with under 20,000 people in an eligible region
• Register your residency officially

For cash grants:

• Usually ages 18–40 (though pension tax breaks have no age limit)
• Commit to living there for 2–3 years minimum
• Start a business or bring a needed professional skill
• Prove you’re moving from a larger town

The benefits of small municipalities in Italy make it possible to live well on less money while enjoying the Italian lifestyle. Between government cash, lower taxes, cheaper housing, and business opportunities, you can build a secure financial future in one of the world’s most beautiful countries. These small Italian villages need new residents, and they’re willing to pay to get them, which means this could be your chance to make a smart financial move while living your Italian dream.

Would you like to read more about similar subjects? Take a look at our related articles here: Italian Citizenship Through Your Child, Italian Citizenship by Descent and Home Renovation Incentives in Italy.