Before you start

Codice fiscale
A determination of whether you are tax resident for the year
Employment or business records, and details of foreign income and assets
SPID or CIE for the Agenzia delle Entrate portal

Step-by-step

1
Establish when tax residence begins
Registration in the anagrafe for more than half the year, or having your habitual abode or main centre of interests in Italy for more than 183 days, makes you resident for the entire calendar year.
OnlineWho: You
2
Budget the two local surcharges separately
Sicily levies a flat regional addizionale of 1.23% for 2026. Palermo levies a municipal addizionale of 1.03% under delibera 137 published on 22 July 2026, with no exempt income band. Both are withheld the year after the income year, in instalments from March to November.
Via employerWho: You
3
Test the impatriate regime against the post-2024 rules
For transfers of residence from 2024, 50% of qualifying employment and professional income is exempt up to €600,000 a year for five tax periods, conditional on high qualification or specialisation, three prior years of non-residence, mainly working in Italy, and a four-year residence commitment. The old 90% southern rate is gone and does not apply in Sicily either.
Via employerWho: YouBefore the first payroll run
4
If you are a pensioner, choose the comune before you choose the flat
Article 24-ter TUIR's 7% substitute tax on all foreign-source income requires residence in a qualifying comune in one of eight southern regions. Sicily qualifies; Palermo does not, because the population ceiling is 30,000 — raised from 20,000 by Law 34 of 11 March 2026 with effect from 7 April 2026.
OnlineWho: You
5
Consider the forfettario if you are self-employed
A 15% substitute tax — 5% for the first five years of a genuinely new activity — on revenue up to €85,000, with a profitability coefficient applied by sector. It replaces IRPEF, both surcharges and IRAP, and INPS contributions are due on top from the first euro.
OnlineWho: You
6
Declare foreign assets on the RW section and budget TARI
Residents must report foreign financial assets and property and pay IVAFE and IVIE on them whether or not they produced income. TARI is billed by the comune to whoever occupies the flat, tenants included, and needs a declaration on moving in and out.
OnlineWho: You

Documents you’ll need

Codice fiscale and SPID or CIE
Certificazione Unica from the employer
Records of foreign income, accounts and property
Deduction receipts — medical, mortgage interest, renovation works, university fees
Registered lease, for tenant deductions and the TARI declaration

Things most newcomers don’t know

Palermo is one of the Italian cities whose municipal surcharge exceeds the ordinary 0.8% ceiling.

The addizionale comunale IRPEF is normally capped at 0.8%, or 0.9% for a provincial capital. Palermo's is 1.03% for 2026 under delibera 137 published on 22 July 2026, after 1.014% in 2025 and 1.002% in 2024 — a slow upward creep — and unlike Bari or Catania it has no exempt band at the bottom, so it applies from the first euro of taxable income. It is a small number that most relocation calculators simply do not model, and it is the one line where a Palermo payslip differs from the template.

Source: Dipartimento delle Finanze

Sicily's regional surcharge is the national floor, which cuts the other way.

The regional addizionale ranges from 1.23% to 3.33% across Italy, and Sicily applies a flat 1.23% — the bottom of the range — where Campania and Lazio charge the maximum and Puglia now reaches it on higher incomes. Combined with the municipal rate, total local income tax on a Palermo salary is around 2.26%, meaningfully lower than in Rome or Naples. The unusual part is the shape rather than the size: high city, low region, where almost everywhere else in Italy is the reverse.

Source: Dipartimento delle Finanze

The 7% pensioner regime is a reason to look at the province, not the city — and the threshold moved in April 2026.

Article 24-ter TUIR gives a foreign pensioner who has not been Italian tax-resident for five years a 7% substitute tax on all foreign-source income for nine tax periods, if they take residence in a qualifying comune in Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise or Puglia. Law 34 of 11 March 2026 raised the population ceiling from 20,000 to 30,000 inhabitants with effect from 7 April 2026, bringing a further band of towns inside it. Palermo has never been eligible and never will be. For a pensioner, that single fact can be worth more than every other difference between one Sicilian address and another.

Source: Agenzia delle Entrate; Law 34/2026 art. 26

The 90% southern impatriate exemption is gone, and southern Italy is where the stale advice still circulates.

Until transfers of residence in 2023, the impatriate regime exempted 90% of qualifying income for people moving to the southern regions, Sicily included. D.Lgs. 209/2023 replaced the whole regime for transfers from 2024 with a flat 50% exemption capped at €600,000 of income and no geographical uplift at all. The relief is also clawed back with interest if you leave Italy inside four years. Anyone modelling a move to Palermo on the 90% figure is out by forty percentage points.

Source: Agenzia delle Entrate; D.Lgs. 209/2023

Common mistakes to avoid

Assuming the standard 0.8% municipal surcharge — Palermo's is 1.03% and has no exempt band.
Modelling a move south on the abolished 90% impatriate exemption.
Taking impatriate relief and leaving Italy inside four years.
Registering residence in Palermo as a pensioner and forfeiting the 7% regime available in smaller comuni nearby.
Comparing the forfettario's 15% with foreign rates while ignoring INPS contributions from the first euro.

Some of this may be out of date. Spotted something inaccurate? Help us keep it right for the next newcomer.