Portugal, once hailed as the ultimate European haven for retirees, is rapidly losing its crown. Rising costs, policy rollbacks, and shifting immigration laws have dimmed its luster. Meanwhile, another European destination has emerged as a compelling alternative — one with comparable charm but more attractive residency and tax incentives. For thousands of expatriates seeking a peaceful yet affordable retirement in Europe, this change is prompting a reassessment of where they now choose to call home.
This dramatic shift didn’t happen overnight. For years, Portugal enjoyed a place atop global retirement rankings thanks to a combination of pleasant climate, friendly locals, and generous tax exemptions. However, 2024 has brought new realities into focus. As government policy changes and local discontent grow, retirees — particularly from North America and Northern Europe — have started migrating elsewhere. Their sights are now set on Italy, which has stepped up as the new “golden girl” of European retiree migration.
Portugal vs Italy: What’s really changing
| Feature | Portugal (2024) | Italy (2024) |
|---|---|---|
| Tax Benefits | Non-Habitual Residency (NHR) program phased out for newcomers | Flat tax regime up to 9 years, with 7% tax rate for pensioners in specific regions |
| Cost of Living | Rising exponentially in Lisbon, Porto, and coastal areas | Still moderate, particularly in southern and central regions |
| Real Estate Affordability | Housing prices up 10-14% year-on-year | Wide variety of affordable properties, especially in rural zones |
| Healthcare Access | High-quality but under strain due to influx | Public and private care readily available in major towns |
| Residency Access | Golden Visa restrictions tightened | Simplified elective residency process for retirees |
Why Portugal is falling out of favor
Portugal’s retreat from its once-lucrative Non-Habitual Residency (NHR) program effectively marked the turning point. Originally launched to attract high net-worth individuals and retirees, the NHR policy offered residents a 10-year tax holiday on most foreign income. But the government, facing pressure from local citizens over rising real estate prices and infrastructure strain, has now closed the door to new applicants.
This decision was accompanied by increased scrutiny of long-term visa holders and tighter property regulations. The much-publicized Golden Visa — previously a ticket to residency through investment — has also been curtailed, now excluding residential property purchases in high-demand coastal zones. These moves, while aimed at curbing housing inflation, have also discouraged new retirees from considering Portugal as a viable long-term option.
Italy steps forward with renewed retirement appeal
As Portugal contracts, Italy expands. Through a range of regional tax incentives and a simplified visa policy for foreign pensioners, Italy has designed an increasingly retiree-friendly framework. The flagship draw? A nominal 7% tax rate on foreign pensions for up to 9 years — but only if retirees move to towns with fewer than 20,000 residents in certain southern regions such as Calabria, Sicily, and Puglia.
In addition to tax benefits, Italy preserves one of the lowest homeownership costs in Western Europe. Attractive stone villas and countryside homes can still be purchased for under €100,000 in many qualified regions. Combine this with breathtaking landscapes, world-class cuisine, and access to both public and private healthcare, and Italy begins to look like more than just a cultural delight — it becomes a sound lifestyle decision.
“The 7% pension tax regime is nothing short of revolutionary — it balances government sustainability with retiree appeal.”
— Antonio Risi, Tax Specialist, Rome
What changed this year
Up until 2023, Portugal remained relatively stable in its residency offerings, if not housing costs. The government’s policy shift, driven by domestic political pressure and rising socioeconomic disparities, has reshuffled the deck. The phase-out of the NHR and amendments to the Golden Visa are seen by many as deterrents. By contrast, 2024 saw Italy enhance its commitment to becoming a global retiree hub, including expanding qualifying zones for pension tax benefits and digitalizing its visa application process.
“Retirees want more than sunshine — they want fiscal stability, medical access, and cultural integration. Italy offers all three in abundance.”
— Laura Bennett, Global Property Analyst
Who qualifies and why it matters
Italy’s new pensioner program is specifically aimed at non-EU citizens who have access to foreign retirement income. To qualify, one must move to a municipality in the approved list, open a local bank account, and register their residence. The goal is to both reverse population decline in rural communities and inject reliable foreign income into these micro-economies.
This policy shift broadens Italy’s international appeal and redistributes wealth into underinvested regions. For retirees, especially those priced out of Portugal, it represents a fresh opportunity to enjoy a high standard of living in Europe without excessive bureaucracy or punitive taxes.
How to apply step-by-step
Applying for Italy’s elective residency visa with access to the 7% tax regime involves several clear steps:
- Obtain proof of sufficient pension income (typically €31,000/year for individuals, €38,000 for couples).
- Secure long-term accommodation in a qualifying rural municipality.
- Purchase international health insurance or enroll in the Italian public system upon arrival.
- Submit an application at the Italian consulate that governs your home jurisdiction.
- Once approved, arrive in Italy and finalize residency based on local municipality registration.
Winners and losers in this new retiree migration wave
| Winners | Losers |
|---|---|
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The bigger demographic trend
What we’re witnessing is a tectonic shift in retiree mobility — one increasingly driven by affordability and fiscal reliability rather than pure climate preferences. With remote consultations, Eurozone-wide banking, and linguistic support expanding, retirees today face fewer hurdles to settling in lesser-known, economically viable areas.
Government incentives play a critical role in influencing these flows. Italy has shown that a focused, regionalized policy can achieve both national and local benefits. Portugal’s reversal serves as a cautionary tale that prioritizing foreign capital over domestic equity can backfire over time.
“Next to affordability, what retirees want is predictability — something Italy now offers more clearly than Portugal.”
— Sofia Martins, Migration Policy Advisor
Is this shift permanent?
While it’s too early to call it permanent, the momentum behind Italy’s rise and Portugal’s fall is undeniable. Real estate data, visa statistics, and fiscal reports all point in the same direction. Meanwhile, local Italian cities are preparing infrastructure upgrades to accommodate the next wave of global retirees. Time will tell whether Portugal rebounds with a new strategy, but for now, the crown has passed.
Frequently asked questions (FAQs)
What is Italy’s 7% pension tax scheme?
The plan allows retirees who relocate to certain small towns in southern Italy to pay a flat 7% tax on all foreign income, including pensions, for up to 9 years.
Is Portugal’s Non-Habitual Residency (NHR) program still active?
As of 2024, the NHR tax regime has been terminated for new applicants, marking a significant policy shift.
Can retirees still move to Portugal under other visas?
Yes, but tax incentives are now limited, and competition for affordable housing has increased significantly.
What is the minimum income requirement for Italy’s elective residency visa?
Typically €31,000 per year for individuals and around €38,000 for couples, although regional variations may apply.
How long does it take to process the Italian residency visa?
The process can take 2–4 months depending on consulate workload and document readiness.
Are healthcare services accessible for retirees in Italy?
Yes, both public and private healthcare systems are robust, especially in more populated regions and urban centers.
Can you buy property in Italy as a foreign retiree?
Yes, there are no restrictions on foreign ownership, and many retirees choose to purchase rather than rent.
Is English widely spoken in rural Italy?
While English is common in tourist areas, rural towns may require basic Italian knowledge for daily life and integration.