For roughly a decade the answer for a UK pensioner thinking about a tax-efficient retirement in southern Europe was "Portugal". The Non-Habitual Resident (NHR) regime offered a flat 10% on pension income, the Algarve was already half-British, and Lisbon was a direct flight from every major UK hub. In late 2023 the Portuguese government legislated NHR out of existence for new pension-income applicants. As of 2026 the landscape looks very different — and Italy has quietly become the best deal in Europe.
The 2026 headline numbers
For a UK retiree drawing, say, £50,000 a year in combined state and private pension and considering a move to southern Europe, the three relevant regimes line up like this:
- 01Italy (Art. 24-ter TUIR) — 7% flat on all foreign-source income for up to 10 years
- 02Greece (Art. 5B of the Greek Income Tax Code) — 7% flat on foreign-source income for up to 15 years
- 03Portugal (post-2024 IFICI / "NHR 2.0") — pension income is no longer eligible; only certain qualifying scientific or high-skill employment income gets the favourable rate
Portugal — effectively closed for new pension applicants
The original NHR offered a 10% flat on foreign pension income (after the rules were tightened from a 0% rate in 2020). The replacement programme — the Incentivised Tax Regime for Scientific Research and Innovation (IFICI), sometimes nicknamed "NHR 2.0" — is aimed at qualifying salaried roles in research, tech, and innovation. Foreign pension income falls outside it. A British retiree moving to Portugal in 2026 pays ordinary Portuguese progressive income tax, which on £50k of pension lands meaningfully above 7%.
Greece — 7% but narrower in practice
Greece introduced a similar foreign-pension regime in 2020 and runs it for 15 years rather than Italy’s 10. The headline rate matches Italy at 7%. The difference is on the ground: the regime applies anywhere in Greece (no town-size restriction) but the inventory of UK-suitable property in the lower price brackets is thinner outside the islands, and the expat infrastructure — English-speaking GPs, schools, conveyancing — is less developed than in southern Italy.
Italy — the most generous, the most prescriptive
Italy’s 7% covers everything Greece’s does, runs for 10 years instead of 15, and tacks on a town-size eligibility rule (≤30,000 inhabitants) limited to eight southern regions. The 10-year ceiling is the visible disadvantage versus Greece. Three things tilt the calculus back in Italy’s favour for most UK pensioners:
- 01Scope: Italy’s 7% applies to rental, dividend, and capital-gains income from foreign assets — not just pension. For a retiree with a UK rental portfolio, that often matters more than the headline pension number.
- 02Property market: southern Italy’s qualifying towns offer materially better restored-stone-house value than the Greek mainland or the most liveable islands at the same budget.
- 03Travel: Bari, Brindisi, Naples, and Rome all run daily direct UK service. Most Greek 7%-eligible locations involve a connecting flight.
What about Cyprus, Malta, and Spain?
Cyprus offers a 5% flat on foreign pension income above an €3,420 annual threshold, with no time limit — attractive on paper but the country is geographically further, the property market is smaller, and the regime has been narrowed in successive budgets. Malta has the Malta Retirement Programme at 15%. Spain has no equivalent regime and taxes UK pension income under ordinary progressive rates. None of the three are head-to-head competitive with Italy at 7%.
Which one fits a UK pensioner in 2026
On the numbers alone: Italy. On the lifestyle, the food, the climate, and the established UK community — also Italy. The only scenarios where Greece beats Italy are (a) you specifically want a Greek-island life, or (b) you place a very high value on the extra five years of regime length and don’t mind paying it in property-quality terms.
In 2020 the answer was Portugal. In 2026 it is Italy — and not by a small margin.
If you want the eligibility check run against your specific UK situation — state pension only, mixed state + private, with or without a UK rental portfolio — that’s the 30-minute call this brokerage starts every relationship with. The number is at the top of the contact page.
