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Tax Havens for Retirees in Europe: Where You Pay Just 5% or 7% Tax

Greece, Italy, Cyprus and Malta offer special tax regimes for pensions, investment income and other foreign-source income.

Residency Retirement Taxes

Reading time: 6 minutes

Million­aire in Retirement: Still Paying High Taxes?

Or pay a fixed amount and keep the rest?

You may have sold a business, spent decades building wealth or now live from dividends, property and investments.

Your current country of tax residence may still take a substantial share of your income in retirement. Other European countries offer a very different deal: under certain regimes, you pay a fixed annual amount regardless of whether your qualifying foreign-source income is €1 million or €10 million.

Greece, for example, charges €100,000 a year. On €1 million of foreign-source income, that works out to an effective 10%. On €10 million, it falls to just 1%. Italy and Poland also offer comparable lump-sum tax regimes.

And you do not even need to be a millionaire.

Greece and Italy also offer foreign retirees a flat 7% tax rate on qualifying foreign-source income. Cyprus and Malta have their own special rules for pensions and investment income.

Whether you have millions in assets or simply a comfortable retirement, Europe offers tax alternatives worth a closer look.

For High-Net-Worth Retirees — A Fixed Annual Tax

Do you receive several million euros a year from dividends, investments or other foreign income sources? If so, the lump-sum tax regimes in Greece, Italy and Poland may be worth a closer look.

Instead of paying tax at progressive rates, you pay a fixed annual amount regardless of how high your qualifying foreign-source income actually is. The higher your income, the lower your effective tax rate becomes.

Illustration of Greece's €100,000 annual lump-sum tax regime

Greece: €100,000 Fixed Annual Tax

Regardless of how high your foreign-source income is

€1 million in foreign-source income? €10 million? In Greece, the annual lump-sum tax remains €100,000.

On €1 million, that equals an effective 10%. On €10 million, just 1%. Greece created a dedicated tax regime precisely for wealthy new tax residents.

How Does the Greek Lump-Sum Tax Work?

Under the HNWI regime under Article 5A of the Greek Income Tax Code, qualifying foreign-source income can be covered by an annual lump-sum tax of €100,000. The amount of qualifying income does not affect the fixed annual tax.

The regime can be used for up to 15 years. Family members can be included for an additional €20,000 per person per year.

What Are the Requirements?

You must move your tax residency to Greece and must not have been a Greek tax resident for at least seven of the previous eight years.

You must also make a qualifying investment of at least €500,000 in Greece, for example in real estate, businesses or securities. In principle, you have three years from the date of application to complete the investment.

Certain holders of Greek investor residence permits are exempt from this additional investment requirement.

Which Foreign Income Is Covered by the Lump-Sum Tax?

The regime generally covers income from foreign sources, including dividends, interest, rental income, pensions and capital gains.

Greek-source income is not covered by the fixed amount and remains subject to the regular Greek tax rules.

For an overview of other regimes, see our article Tax Havens in Europe: Special Tax Regimes for New Residents.

How Much Inheritance Tax Would Your Children Pay?

In Greece, children generally benefit from a €150,000 tax-free allowance, after which progressive inheritance tax rates of 1% to 10% apply. Under the HNWI regime, movable assets located abroad are also exempt from Greek inheritance tax.

Quick Facts: HNWI lump-sum tax · €100,000/year · Qualifying foreign-source income covered by the lump sum · €500,000 investment · Max. 15 years · Inheritance tax for children: €150,000 tax-free allowance, then 1–10%.

Illustration of Italy's €300,000 annual lump-sum tax regime

Italy: €300,000 Fixed Annual Tax

Millions in foreign income covered by one annual amount

Italy has its own special tax regime for wealthy new residents: from 2026, qualifying new arrivals pay €300,000 a year on qualifying foreign-source income, regardless of how high that income actually is.

On €5 million of foreign-source income, that works out to an effective 6%. On €10 million, just 3%.

How Does the Italian Lump-Sum Tax Work?

Under the flat-tax regime for new tax residents under Article 24-bis, Italy replaces ordinary income tax on qualifying foreign-source income with a fixed annual amount.

The regime can be used for up to 15 years. Family members can be included for an additional €50,000 per person per year.

The €300,000 amount applies to individuals who become Italian tax residents from 2026 onward.

What Are the Requirements?

You must move your tax residency to Italy and must not have been an Italian tax resident for at least nine of the previous ten tax years.

Unlike the Greek regime, there is no minimum investment requirement.

Which Foreign Income Is Covered by the Lump-Sum Tax?

The regime generally covers foreign dividends, interest, rental income, pensions and capital gains.

One important exception applies to capital gains from substantial shareholdings in foreign companies. During the first five years, these gains are generally not covered by the lump-sum regime.

Italian-source income remains subject to ordinary Italian taxation.

How Much Inheritance Tax Would Your Children Pay?

Italy generally grants children an exemption of €1 million per child, with inheritance tax of 4% applying above that amount. The HNWI regime offers an additional advantage: while the regime applies, only Italian assets are generally subject to Italian inheritance and gift tax.

Quick Facts: HNWI lump-sum tax · €300,000/year · Qualifying foreign-source income covered by the lump sum · Not resident for 9 of the previous 10 years · Max. 15 years · Inheritance tax for children: €1 million exemption, then 4%.

Illustration of Poland's 200,000 PLN annual lump-sum tax regime

Poland: 200,000 PLN Fixed Annual Tax

A total annual cost of around €70,500 — even with millions in foreign income

Poland offers wealthy new residents a special lump-sum tax regime. Instead of paying progressive income tax on qualifying foreign-source income, you pay a fixed annual tax of 200,000 PLN, around €47,000.

In addition, you must spend 100,000 PLN, around €23,500, per year on qualifying purposes. From the second tax year onward, that brings the total annual financial burden to around €70,500.

On €1 million of foreign-source income, that equals roughly 7.05%. On €5 million, it falls to about 1.41%.

How Does the Polish Lump-Sum Tax Work?

The Polish lump-sum tax regime under Articles 30j–30p of the Income Tax Act allows qualifying foreign-source income to be covered by a fixed annual tax of 200,000 PLN, around €47,000.

You must also spend at least 100,000 PLN, around €23,500, each year on purposes defined by law, such as supporting science, education, culture or sport.

These mandatory expenditures are not taxes, but they still form part of the real cost of the regime. They first apply in the tax year after you move to Poland.

The regime can be used for a maximum of ten years.

What Are the Requirements?

You must move your tax residency to Poland and must not have been a Polish tax resident for at least five of the previous six tax years.

You must opt into the regime no later than the end of January in the year following your move and provide evidence of your previous tax residency.

Which Foreign Income Is Covered by the Lump-Sum Tax?

The regime generally applies to foreign-source income, including dividends, interest, rental income, pensions and capital gains.

Income falling under Poland's controlled foreign company rules is specifically excluded.

Polish-source income remains subject to ordinary taxation. The Polish lump-sum tax also does not eliminate any taxing rights another country may have.

How Much Inheritance Tax Would Your Children Pay?

Poland allows children to qualify for a full inheritance-tax exemption regardless of the value of the inherited assets. In principle, the inheritance must be reported to the tax authority within six months unless a statutory exception to the reporting requirement applies.

Quick Facts: HNWI lump-sum tax · 200,000 PLN (approx. €47,000)/year · Additional 100,000 PLN (approx. €23,500) in mandatory expenditures from the following year · Qualifying foreign-source income covered by the lump sum · Max. 10 years · Inheritance tax for children: 0% if reporting requirements are met.

For Middle-Income Retirees — Low Special Tax Rates

You do not need to be a millionaire to benefit from special tax regimes in retirement.

Greece and Italy offer foreign retirees a flat 7% tax rate on qualifying foreign-source income. Cyprus taxes qualifying foreign pensions at just 5% above an annual tax-free threshold.

What matters here is not the size of your wealth, but the type of pension you receive and where you establish tax residency.

Illustration of Greece's 7% tax regime for foreign retirees

Greece: Just 7% Tax

Not only on your pension, but on all qualifying foreign-source income

Alongside its lump-sum tax regime for wealthy individuals, Greece offers a second option. If you move to Greece as a foreign retiree, your qualifying foreign-source income may be taxed at a flat 7%.

On annual foreign-source income of €50,000, that would mean €3,500 in Greek income tax. On €100,000, it would be €7,000.

How Does the Greek Retiree Tax Regime Work?

The special tax regime for foreign retirees under Article 5B provides for a flat 7% tax rate on qualifying foreign income.

Unlike the HNWI regime, you do not pay a fixed annual amount. Instead, you pay a percentage of the income you actually receive. The regime can be used for up to 15 years.

What Are the Requirements?

You must receive a pension from abroad and move your tax residency to Greece.

You must also not have been a Greek tax resident for at least five of the previous six years. Your previous country of tax residence must have a tax-cooperation agreement with Greece.

Applications are generally submitted to the Greek tax authority by March 31.

What Happens to Your Pension?

Moving your tax residency to Greece does not automatically mean that every pension becomes taxable only in Greece.

The tax treatment depends on the type of pension and on the tax treaty between Greece and the country from which the pension is paid.

Depending on the relevant tax treaty, private and occupational pensions may be taxable in Greece and potentially qualify for the 7% regime. Statutory pensions, civil service pensions and other government-related retirement payments can be subject to different rules.

You should therefore check the applicable tax treaty before assuming that your entire pension will qualify for the Greek 7% rate.

How Is Your Other Foreign Income Taxed?

The 7% rate is not limited to your pension. Qualifying foreign dividends, interest, rental income and capital gains are also covered by the special regime.

Greek-source income remains subject to ordinary Greek taxation. Taxing rights of other countries, for example in relation to foreign real estate, remain governed by the relevant tax treaty.

How Much Inheritance Tax Would Your Children Pay?

In Greece, children generally benefit from a €150,000 tax-free allowance. Above that amount, progressive inheritance tax rates of 1% to 10% apply.

Quick Facts: Special retiree regime · 7% on qualifying foreign-source income · Foreign pension required · Not resident for 5 of the previous 6 years · Max. 15 years · Inheritance tax for children: €150,000 tax-free allowance, then 1–10%.

Illustration of Italy's 7% tax regime for foreign retirees

Italy: Just 7% Tax

Tax incentives for retirees in southern Italy

A house in Puglia, an apartment in Sicily or a small town on the Calabrian coast: Italy combines retirement in the south with a special tax regime.

As a foreign retiree, you may be able to have qualifying foreign-source income taxed at just 7%. That applies not only to your pension, but also to other income from abroad.

On €50,000 of qualifying annual income, that would mean just €3,500 in Italian income tax.

How Does the Italian Retiree Tax Regime Work?

The special tax regime under Article 24-ter of the Italian Income Tax Code allows qualifying foreign income to be taxed at a flat rate of 7%.

Unlike Italy's HNWI regime, there is no fixed annual amount. You pay the reduced rate on the qualifying foreign-source income you actually receive.

The regime is available for a maximum of ten tax years.

What Are the Requirements?

You must receive a foreign pension and move your tax residency to Italy. You must also not have been an Italian tax resident during the previous five tax years.

There is another important restriction: where you choose to live.

The regime applies only in qualifying municipalities in southern Italy, particularly in Sicily, Calabria, Sardinia, Campania, Basilicata, Puglia, Molise and Abruzzo. In 2026, the population limit was increased to 30,000 inhabitants. Certain municipalities in former earthquake zones also qualify.

You therefore cannot simply move to Milan, Florence or Rome and automatically benefit from the 7% regime.

What Happens to Your Pension?

The answer depends on the type of pension, the applicable tax treaty and, in some cases, your nationality.

Private pensions and ordinary occupational pensions may fall under Italian taxing rights and potentially qualify for the 7% regime.

Statutory and civil service pensions may be treated differently under the relevant tax treaty, with taxing rights sometimes remaining in the source country.

You should therefore not assume that your entire pension will automatically be taxed at only 7% after moving to Italy.

How Is Your Other Foreign Income Taxed?

Italy's regime is not limited to foreign pensions. Foreign dividends, interest, rental income and capital gains can also fall within the 7% regime.

Italian-source income remains subject to ordinary Italian taxation.

How Much Inheritance Tax Would Your Children Pay?

In Italy, children generally benefit from an exemption of €1 million per child. Amounts above that threshold are subject to inheritance tax at 4%.

Quick Facts: Special retiree regime · 7% on qualifying foreign-source income · Foreign pension required · Residence in a qualifying municipality with up to 30,000 inhabitants · Max. 10 years · Inheritance tax for children: €1 million exemption, then 4%.

Illustration of Cyprus's 5% tax regime for foreign pensions

Cyprus: Just 5% Tax on Your Foreign Pension

Since 2026, the first €5,000 each year is tax-free

Cyprus offers foreign retirees a separate special tax regime. Your foreign pension is taxed at just 5% — and only on the amount above €5,000 per year.

With an annual pension of €40,000, that results in just €1,750 of Cypriot income tax.

How Does Cyprus Tax Foreign Pensions?

Under the 5% special regime for foreign pensions, the first €5,000 of your annual foreign pension has been tax-free since 2026. Only the amount above that threshold is taxed at a flat rate of 5%.

There is no time limit on the regime.

What Are the Requirements?

You must be tax resident in Cyprus and receive a qualifying pension from abroad.

You can establish Cypriot tax residency under the standard 183-day rule or the Cyprus 60-day rule. The latter has additional requirements, including maintaining a permanent home and a qualifying economic connection to Cyprus.

There is no minimum investment or minimum pension amount required for this special tax treatment.

What Happens to Your Pension?

How your pension is taxed depends on the type of pension and the tax treaty between Cyprus and the country where the pension originates.

Private pensions and ordinary occupational pensions may fall under Cypriot taxing rights and potentially qualify for the 5% special regime.

Statutory pensions, civil service pensions and other government-related retirement payments can be treated differently. In some cases, the source country may retain taxing rights.

If both countries have taxing rights over the same pension, the applicable tax treaty determines how double taxation is relieved. The exact treatment therefore depends on your country of origin and the type of pension you receive.

How Is Your Other Foreign Income Taxed?

The 5% special tax treatment applies only to qualifying foreign pensions. Dividends, interest, rental income and capital gains are not covered by this pension regime.

Not receiving a pension yet, but living from dividends and investment income? Then the Cyprus Non-Dom regime may be worth considering. It offers separate tax advantages and does not require pension income.

How Much Inheritance Tax Would Your Children Pay?

Cyprus abolished inheritance tax in 2000. Your children therefore pay no Cypriot inheritance tax, although taxing rights of other countries may still apply.

Quick Facts: Special retiree taxation · 5% on foreign pensions above €5,000/year · Cypriot tax residency required · No time limit · Inheritance tax for children: 0%.

Comparison of fixed annual tax regimes and percentage-based taxation in Europe

When Is a Fixed Annual Tax More Attractive Than Regular Taxation?

The higher your qualifying foreign-source income, the lower the effective rate of a fixed annual tax becomes. But at what income level does the lump-sum model become more attractive than percentage-based taxation?

The differences between Greece, Italy and Poland are substantial.

Poland: From Around €240,000 in Annual Income

Under Poland's ordinary progressive tax system, income above 120,000 PLN, around €28,200, is subject to a 32% tax rate. At higher income levels, a 4% solidarity levy may also apply.

At around €240,000 of annual income, the ordinary tax burden already reaches roughly the total cost of the lump-sum regime. At €1 million, the regime's effective total burden falls to around 7.05%.

Greece: From Around €1.43 Million per Year

Greece offers both a fixed annual tax of €100,000 and a 7% special regime for foreign retirees.

On €1 million of qualifying foreign-source income, 7% equals €70,000 in tax. On €2 million, it rises to €140,000.

The break-even point is around €1.43 million per year. Above that level, the fixed annual tax is lower than a 7% tax rate.

Italy: From Around €4.29 Million per Year

Italy also offers both models: a €300,000 annual lump-sum tax for new entrants from 2026 and a 7% special regime for foreign retirees.

On €2 million of qualifying foreign-source income, 7% would amount to just €140,000. On €5 million, however, it would rise to €350,000.

From around €4.29 million per year, Italy's fixed annual tax becomes lower than taxation at 7%.

You Worked Hard for Your Wealth.

But can you — and your children — keep it?

You spent decades building wealth, investing and planning ahead. Taxes and levies keep rising in many countries. But retirement can also be the point where you substantially reduce your tax burden.

Greece, Italy, Poland and Cyprus show that you do not necessarily need to leave Europe to do it. Whether through a fixed annual tax on millions in foreign-source income or a special rate of just 5% or 7% on qualifying income:

Europe offers tax alternatives for very different levels of wealth and income.

If you are an EU citizen, freedom of movement can also make relocating to another EU country significantly easier. Depending on your nationality, however, separate immigration or residency requirements may apply.

But what happens to your wealth later?

In many countries, wealth that has already been taxed can be taxed again when you leave it to your children. But that is not true everywhere. Cyprus has no inheritance tax, Poland offers a full exemption for children subject to the applicable requirements, and the HNWI regimes in Greece and Italy provide additional inheritance-tax advantages.

You spent decades building your wealth. Now you can decide where to spend your retirement — and how much of that wealth eventually reaches your children.

Last updated: September 26, 2026