What Expats pay, What locals Pay, and Why Abruzzo’s villages keep emptying
The 7% flat-tax was introduced to help save Abruzzo’s emptying villages. After seven years, it has attracted some foreign retirees, but young people are still leaving. Since the system relies on them, this matters. Here’s what each group pays, and why the numbers count.
Tax Breaks, But Not for Locals
If you’ve read about retiring to Abruzzo in English, you’ve probably seen the 7% flat-tax called a win-win. Foreign retirees pay less tax on their pensions. Mountain villages see houses restored, people moving in, and more money spent locally. Italy also receives pension income that would otherwise have remained abroad.
It’s an optimistic story, and some of it is true. Houses are being fixed up. Streets that were empty now have new neighbours. Local tradespeople have work. Most retirees who move here do so because they love the place and the lifestyle. Nothing that follows is meant as criticism of them.
But after seven years, the main promise, that the regime would save Abruzzo’s emptying villages, doesn’t hold up when you look at the data. Locals are noticing the changes and feeling uneasy. This article explains what each group pays, what they get, and why the numbers matter more than the property ads suggest.
What the 7% Regime Is, and What It Was Meant to Do
The regime is set out in article 24-ter of Italy’s TUIR tax code and has been in force since 1 January 2019. It lets foreign retirees pay a flat 7% tax on all foreign-sourced income for 10 years. The main condition is geographic: they must move their tax residence to a qualifying town (comune) in one of eight southern regions. Abruzzo is one of the regions, along with Sicily, Calabria, Sardinia, Campania, Basilicata, Molise and Puglia. The town has to remain below a population limit, initially set at 20,000 residents and raised to 30,000 in April 2026, widening the net further.
The 7% rate replaces the standard Italian income tax schedule, which ranges from 23% on the first €28,000 of income to 43% above €50,000. For a well-off retiree with a foreign pension, the difference is large. A €60,000 pension that would incur roughly €18,000 in Italian income tax under the normal rules would incur €4,200 under the 7% regime.
The stated aim of the regime, written into the 2019 law, was rural revival. It would breathe life back into the villages of the South and inland areas suffering from emptying out. New residents with steady foreign pensions would, the argument went, spend money locally, restore houses, and slow the slide towards becoming ghost villages.
In 2022, the regime was expanded to cover the Cratere as well, and the inland towns left hollow by the 2009 L’Aquila earthquake, to help bring those communities back to life. They are the villages this piece is about.
What Each Side Pays
For non-EU retirees, like Americans, Canadians, or Brits who came after Brexit, the real costs are clearer than most articles suggest.
Under the 7% regime, a retiree or a couple with a €60,000 pension pays €4,200 in flat tax to the Italian state. The 7% is a substitute tax: it replaces all national, regional, and town-level income taxes in one payment, all of which flow to Rome rather than to L’Aquila, the regional capital.
For EU citizens, the rules are different, though less clean than they look. A German, French or Dutch retiree on the S1 form keeps their home country’s healthcare cover, and their home country reimburses Italy for their care, so they pay no iscrizione volontaria. On healthcare, the picture resembles that of the non-EU retiree: a real payment at the per-person level, nothing at the deficit level. Tax is separate. An EU retiree on the same 7% deal, or one drawing a government pension taxed back home, pays no local surcharge. But an EU retiree who simply moves here and pays ordinary Italian tax on a private pension is taxed like a local, regional surcharge included, and does pay into the deficit. The exemption is a feature of the 7% regime, not of the passport.
The money goes to the central health fund in Rome, which redistributes it to regions on a per-person basis. Abruzzo eventually gets roughly the per-person share of those payments through the standard funding formula.
For comparison, a primary teacher in Abruzzo on around €27,000 pays roughly €2,400 in national income tax (IRPEF in Italy), plus around €500 in regional and municipal income surtax. Every euro of that local payment goes into the regional healthcare deficit.
And the local does not stop paying it upon retirement. An Abruzzese on an ordinary pension keeps paying that same regional and town surtax on the pension, year after year, as long as it clears the modest exemption line, which a normal pension does. The 7% retiree pays it at no point, on no income, in no year.
Both groups rely on the same hospitals, the same MRI machines, and wait on the same lists.
Why the €500 Looks Like Peanuts, and Why That Is Misleading
The retiree’s €4,000 in iscrizione volontaria looks like peanuts to a North American reader, and there is a reason for that. A 65-year-old American on Medicare typically pays $5,000 to $7,500 a year in premiums alone, before deductibles and copays. A working family on employer-sponsored insurance pays around $25,000 a year in employee and employer contributions. €4,000 looks barely worth measuring.
None of this is the retiree’s fault. An American who has spent forty years navigating insurance companies, networks, deductibles, prior authorisations, and the constant low-grade dread of medical bankruptcy arrives in Italy with a mental model that does not have room for what they are now seeing. Healthcare, in their head, is something a company sells you for a premium. Here, it is something the community owns and runs together. Nobody hands a new arrival an orientation document explaining this. They are not used to a European health service. The relief, when they realise what is on offer, is real. The structure underneath the relief is not visible from where they are standing.
But the comparison is misleading, and the gap in understanding sits at the heart of the problem. In the United States, hospitals are privately owned. The patient is a customer of a company that maintains the building. The leaking roof at HCA’s nearest hospital is HCA’s problem to fix. The patient is at arm’s length from the building.
In Italy, hospitals are not owned by companies. It belongs to the region’s residents. Every Abruzzese taxpayer is a part-owner of the local hospital, of every ASL building, the local health authority, and of every village clinic. The €500 the teacher pays in local surtax is not a premium paid to a service provider. It is their share of keeping a building they jointly own from falling apart. When the ceiling leaks, it is their ceiling.
The retiree’s iscrizione volontaria covers their basic per-person share of healthcare in a balanced regional system. It does not cover the additional costs of running a system at a deficit. The taxes the teacher pays fund upkeep: patching up a system, paying suppliers 8 days late, and dealing with private clinics to absorb waiting lists.
The retiree pays the regular amount. The local pays that, plus an extra fee to cover the system’s shortfalls.
And the local carrying that surcharge is not always still working. A retired villager, on a pension a fraction of the new arrival’s, is paying their share of the upkeep too. The incomer on the 7% is not. So a modest Italian pension helps keep that hospital standing, one that the new arrival uses just as much, while the far larger foreign income, under the rules as written, contributes nothing to it.
The Cost of Getting Older
Italian healthcare costs rise steeply with age, and the iscrizione volontaria does not account for that. A 75-year-old uses about 4 to 5 times as much medical care as a 35-year-old. The Italian social contract handles this through working-life taxation: locals pay heavily into the system during their working years, then draw heavily from it during retirement. The 7%-regime retiree pays the same iscrizione volontaria each year for ten years, while their use of the system rises year by year. They paid into another country’s healthcare system through their working years, and that money stays in the country that collected it. They draw on the Italian system at the stage of life when it is most expensive to serve them. Again, this is the regime’s design, not the retiree’s choice.
It is not only more frequent use. It is more expensive to use. A working-age family’s healthcare needs are mostly episodic and cheap: a child’s broken arm from a volleyball game, an uncomplicated birth, the occasional appendix. The serious money goes on the conditions that cluster from sixty-five onwards:
- Hip or knee replacement: around €8,000 to €15,000 each.
- Cataract surgery: €1,500 to €3,000 per eye.
- Cancer treatment: from €30,000 to over €100,000 across a course of care.
- Cardiac work: in the same range, with diabetes, dementia and other long-term conditions adding a slow, years-long cost on top.
Across the Italian SSN, the national health service, the over-65 population accounts for roughly 60% of total healthcare spending while making up about a quarter of residents. The 7% regime brings new residents into the country at the start of the decade who need this kind of care. Their iscrizione volontaria is a flat payment that does not vary with the rising cost of serving them.
For EU citizens, the rules are different. A German, French, or Dutch retiree on the S1 form keeps their home country’s healthcare cover, and their home country reimburses Italy for their care. They do not pay the iscrizione volontaria, nor do they pay the regional tax surcharge that funds the deficit. The picture, for them, looks much the same as for the non-EU retiree: a real payment at the per-person level, none at the deficit level.
What the Data Shows About the Regime’s Stated Goal
The 7% regime was sold as a tool against rural depopulation. Seven years in, the question is empirical: is Abruzzo’s emptying out slowing?
The headline number is misleading. Abruzzo’s total population at the end of 2024 was 1,269,118, down just 453 on the year before. That looks almost flat. But a flat total hides what is moving underneath it. The coast holds while the interior empties. And the count stays level only because older residents and working-age migrants from abroad are filling in for the young who leave, and the children are no longer being born. The headcount barely moves. The young and working-age base beneath it is shrinking.
Between 2019 and 2024, the period in which the 7% regime has been in force, the broad regional picture has been:
- The Abruzzo interno, the inland and mountainous areas where most qualifying comuni are located, emptied out faster than the national rural average: 3.8% in the last decade, compared with 2.7% nationally.
- The natural balance, births minus deaths, has run heavily negative every year. In 2023 alone, Abruzzo recorded 8,251 more deaths than births.
- The Aldo Ronci study for CNA Abruzzo projects that the region will lose 100,000 residents by 2041, bringing the population from 1.27 million to 1.17 million.
- 19 of the 20 Abruzzese comuni with the highest old-age dependency ratio are inland mountain villages, exactly the kind of comune the 7% regime was meant to help.
The regional migration balance has improved. Abruzzo recorded a positive migration balance of +3.67 per thousand between 2019 and 2023, mainly because of foreign arrivals. But the main foreign nationalities settling in Abruzzo are Romanian (23.5% of the foreign population), Albanian (12.3%) and Moroccan (9.2%). These are working-age labour migrants, not 7%-regime retirees. They are the demographic counterweight that is keeping the headline number from sliding further. The 7%-regime population is a small subset of that, and clustered in specific comuni rather than spread across the inland areas the regime was meant to help.
The data leads to an uncomfortable truth. The 7% regime brings foreign retirees to a few Abruzzese villages, but it isn’t stopping the overall decline. In some areas, it’s replacing working-age locals who can’t afford to stay with retired foreigners who can. The population number stays the same, but the village changes. Schools still close.
What the Schools Show
School numbers are the clearest evidence of all. They strip out the retiree effect entirely, because retirees do not add children to school rolls. They measure the family-age population directly. In the school year just gone, 2025-2026, Abruzzese state schools enrolled 157,764 students, 2,607 fewer than the year before, and across the last four school years, the cumulative loss is 9,851. For 2026-2027, the regional school office expects a further drop of around 3,800, spread across all four provinces:
- Chieti: about 1,400 fewer
- Pescara: about 1,300 fewer
- Teramo: about 840 fewer
- L’Aquila: about 280 fewer
Unions and the regional school office say this trend is “structural,” not just a temporary dip. It’s caused by low birth rates and families moving away. Every child who leaves usually means two working parents who now pay taxes and IRAP elsewhere. Class sizes are now below 19, and unions warn that more small inland schools may close soon.
Where the Money Actually Flows
The depopulation figures hide an important detail. Most Abruzzese who leave do not leave Italy. They leave the region. In 2023-2024, the most recent ISTAT figures, more than a quarter of Abruzzo’s internal leavers went to Lazio, with Lombardy in second place. Abruzzo and Molise are the only two southern regions where Lazio is the top destination rather than Lombardy. The pattern reflects geography: a young Abruzzese looking for steadier work is more likely to settle in Rome than to make the longer move north.
This matters because of how Italian tax revenue is split. National income tax follows the citizen, no matter where they live in Italy. Regional local tax follows their residence. So an Abruzzese who moves to Rome keeps funding Italy. They no longer fund Abruzzo. Their local tax goes to Lazio’s healthcare system. Their employer’s IRAP is paid in Lazio. Their per-person share of the national health fund is allocated to Lazio. Abruzzo sees the loss without seeing any offset.
The cleanest way to see this is to lay the four cases side by side. Each row is a typical person in that situation, with the income they would really have. The columns show what they pay, and where the money lands.
Only the first group actually puts money into Abruzzo’s regional accounts. People who leave for other parts of Italy still pay taxes to the country, but not to Abruzzo. Those who move abroad take their taxes with them. The 7% retirees, even though there aren’t many, pay taxes to Rome, not to L’Aquila. The regime was meant to solve a regional problem, but it doesn’t bring in regional revenue. Instead, it shifts people across a national tax line, benefiting Rome.
| Who they are | Scale, most recent data | National tax to Italy | Regional tax to Abruzzo |
|---|---|---|---|
| A primary teacher staying in Abruzzo, around €27,000 | The typical local | Around €2,400 a year | Around €500 a year (regional and town surtax), plus IRAP via their employer |
| The same teacher, moving to Rome, Milan or Bologna | Over a quarter of internal leavers go to Lazio; most of the rest to Lombardy | Still paid to Italy in full | None (now paid to Lazio, Lombardia, etc.) |
| Abruzzese moving abroad | 179,715 on AIRE, 13.5% of the region; thousands more leaving each year | Largely none (depends on tax treaty) | None |
| Foreign retiree on the 7% regime, €60,000 pension | 88 in Abruzzo across 2019-2021 (latest MEF data) | €4,200 a year flat tax to Rome, plus €2,000-2,789 a year iscrizione volontaria | None |
Italy as a whole does not lose its working-age taxpayers when they move from Sulmona to Rome. Abruzzo does. So the problem here is not really Italy’s. It is a regional one: what happens to a region’s finances when it loses its working-age people to other regions and countries, while gaining a foreign-pensioner inflow whose taxes go elsewhere?
The Cuckoo Dynamic
If you look at the bigger picture, a pattern appears. In towns where 7% retirees settle, house prices have gone up, but local wages haven’t. Many young Abruzzesi inherit family homes, but houses bought and restored by newcomers now sell at prices set by foreign pensions rather than local incomes. This makes it hard for locals to move up. The teacher who might have stayed, raised a family, and paid €500 a year into the regional system has left for Bologna or Munich. The total population doesn’t change much, but the village’s makeup does.
It’s not just housing. The overall cost of living has gone up, too. Abruzzo has the highest legal IRAP rate at 4.82%, compared to 4.73% in Le Marche and 3.90% in most of the north. This higher tax raises prices for everything; the baker, supermarket, plumber, mechanic, and builder all have higher costs and pass them on. In some villages, restaurant prices have risen to match what new residents can pay. Builders charge more because of demand from foreign buyers. For locals, the squeeze isn’t just the €500 surtax for healthcare, it’s the extra cost added to almost every purchase.
The cushion is thinning at the same time. In 2026, 27 Abruzzese mountain comuni lost their official mountain status as part of a national review. With it went their access to the FOSMIT fund, the national fund for Italy’s mountain comuni, which paid for snowploughs, school buses, support for young families and small healthcare schemes. In the smallest and most fragile villages, the support is being pulled away just as the daily costs rise.
There is something of the cuckoo in this. No individual retiree is responsible for it. No individual local is responsible for leaving.
The regime itself, created in Rome, is like the cuckoo mother: it brings in foreign pension income, restores houses, and fills villages, all without Rome needing to raise unpopular taxes on its own voters. L’Aquila didn’t design the scheme and couldn’t refuse it. A region with so few people and little money takes any income it can get. That’s not cynicism, it’s just the numbers, and those numbers only work for a while.
The cuckoo father, in the case of American retirees, is the United States, long since flown. It taxed its citizens throughout their working lives. It used those taxes to maintain its own schools and roads. It still collects from their worldwide income today, while putting nothing back into the Italian system they now live under. The retiree pays in through the 7% and the iscrizione volontaria. The country where they earned it pays nothing.
The cost of feeding the chick, the regional healthcare and infrastructure the retiree will need more and more of, sits with the host nest. The locals pay around €500 each in local surtax to keep the system everyone uses running.
If you’re one of these retirees, this isn’t directed at you. You followed the rules as Italy set them. The issue is with the rules themselves, not with the people who follow them.
Who the Cuckoo Left to Pay
Look at who actually funds the regional system the regime leans on, and the ground feels thin. Abruzzo has about 508,000 people in work, out of a population of roughly 1.27 million. Four in ten of those workers are aged between 50 and 64. Only about one in five is under 35. The older half of the workforce is growing, while the younger half is shrinking, and the largest single block of workers in the region is now within sight of retirement.
The surtax that keeps the hospitals open comes mostly from the minority earning above €28,000, and that minority is old. Pay in Italy rises slowly with age, and on average, it only reaches €28,000 between 45 and 64. A worker in their twenties or thirties earns well below it. The typical Italian aged 25 to 44 earns around €22,000, and in Abruzzo, which is poorer than the national average, the figure is lower still. So the higher earners who carry the regional bill are, almost by definition, the older ones. There is no broad layer of young high earners coming up behind them.
The young who might have become that layer are leaving. Around 8,500 young Abruzzesi left the region between 2011 and 2023, roughly 12% of the youth population against a national average of 4%, and they took their degrees and their skills with them. The most likely to go are the educated, especially educated young women. These are the people who, in fifteen years, would have been the region’s doctors, engineers and teachers paying the top band of the surtax. They will be paying it somewhere else.
Italy’s social contract has always relied on families, with the working generation supporting the elderly, often in the same home. The regime quietly pushes this idea further than it was meant to go. Now, a shrinking and ageing group of local workers helps fund regional services, especially healthcare, which a wealthier group of foreign retirees will use increasingly. Fewer locals are supporting more comfortable newcomers.
There’s a clear irony here. Italian debates often focus on poor migrants as a burden on the state. But this policy does almost the opposite: it quietly helps wealthier migrants settle, with part of the cost covered by local workers who have less money and fewer young people each year. This isn’t the retirees’ fault; they pay what the law requires, and the money goes to Rome. Still, it’s clear that some of those with the least are helping to support the comfort of those with the most.
The Question Worth Asking
The regime isn’t stopping rural depopulation. The numbers show it. The data shows it. Local mayors, shopkeepers, and school leaders see it every day. Fixing up a stone house isn’t the same as keeping a village alive. The crater measure promised to bring people back to earthquake-hit villages, but those places are still losing residents.
A village survives when working-age people can make a living, raise families, and afford to stay. The 7% regime doesn’t do that. Instead, it attracts a different group: retirees who are comfortable, mobile, and mostly past the age of raising children. They use local healthcare but don’t pay into it through working-age taxes.
If the locals continue to leave faster than retirees arrive, the shop and the school close, the doctor leaves, and at some point, the regime stops drawing anyone in because there is no village left to draw them in. That is the trajectory the data shows. Whether the regime is reversed, redrawn to attract working-age families, or allowed to play out is a question Italian politics is not yet asking out loud.
If you’re thinking about moving to Abruzzo because of the 7% regime, it’s important to see the full picture. The villages are beautiful, the welcome is genuine, the food is great, and the landscape feels truly Italian; none of that has changed. But property listings don’t mention who pays for everything else. Your healthcare and other regional services are mostly funded by local workers, a group that’s getting smaller and older. Abruzzo isn’t just cheap; it feels that way because someone else is helping cover the costs.
A Few Italian Terms
- comune (plural comuni): an Italian town and the local council that runs it.
- Cratere: the earthquake-reconstruction zone, the inland towns hit by the 2009 and 2016 quakes.
- iscrizione volontaria: the voluntary yearly fee a non-EU resident pays to join the national health service
- SSN (Servizio Sanitario Nazionale): Italy’s national health service.
- ASL (Azienda Sanitaria Locale): the local health authority that runs the hospitals and clinics.
- IRPEF: Italy’s national income tax. The regional and town surtaxes added on top are what fund local services.
- IRAP: the regional tax on business activity, paid by employers.
- FOSMIT: the national fund that supports Italy’s mountain towns.
- AIRE (Anagrafe degli Italiani Residenti all’Estero): the official register of Italians living abroad.
- Aree Interne: Italy’s remote inland areas, the target of a national support strategy.
- MEF: Italy’s Ministry of Economy and Finance.
- borghi: small historic villages.
- TUIR: Italy’s main income tax code. The 7% regime is set out in article 24-ter.
Author: Sam Dunham
Sam is a freelance SEO content creator and IGCSE Geography and English teacher in Rome. She also runs the Life In Abruzzo Cultural Association, sharing stories and insights about this captivating region. Alongside raising a teenager, Sam hosts guests at her family’s traditional home, the Little House of the Firefly in Abruzzo, offering a warm welcome and insider tips on local culture, food, and hidden gems.
