Less Growth, More Life: Why More and More Americans Are Choosing Italy (and What the US-EU Comparison Really Shows)

Is the European "Decline" a Statistical Illusion?

For some years now, a figure has circulated like a mantra at economic conferences and in political speeches: from 2000 to today, the eurozone's per capita GDP would have grown at roughly half the rate of that of the United States. This is the number that US Secretary of Commerce Howard Lutnick brandished at Davos this past January to brand Europe as a continent in structural economic decline, unable to keep pace with American innovation and now cut off from the artificial intelligence revolution.

Nobel laureate Paul Krugman, in a lengthy and deliberately "wonkish" analysis published on his Substack on July 5, 2026, has challenged this narrative from a technical yet substantive perspective. His central thesis: when one looks at GDP or productivity calculated at purchasing power parity (PPP), year by year, the gap between Europe and the United States has not widened at all over the past 25 years — if anything, it has narrowed slightly. The "US-EU paradox," as Krugman calls it, arises from the fact that there are two equally orthodox statistical methods, both used by authoritative institutions, which nonetheless lead to opposite conclusions: growth measured in current currency tells a story of a struggling Europe, while growth measured in purchasing power tells a story of substantial resilience.

Krugman identifies two technical reasons for this discrepancy. The first is the different industrial composition of the two economies: the United States is far more concentrated in the technology sector, and this generates a divergence in growth statistics that does not translate into a comparable divergence in real living standards. The second is the intrinsic difficulty of measuring growth amid rapid technological change — a problem that eases when comparing economies at a given point in time rather than over time.

A contribution published on July 11, 2026 in Stefano Feltri's newsletter "Appunti," authored by economist Maurizio Pugno, enriches the picture by shifting the focus from GDP to well-being. A report by the European Commission's Joint Research Centre, cited in the article, would show an improvement in the psychological and social well-being of European citizens relative to Americans starting in 2010, with life satisfaction rising in Europe while in the United States it tends to decline despite more sustained GDP growth — the classic "happiness paradox" already observed in the 1990s, now even more pronounced. Added to this is a data point from Our World in Data cited in the article: life expectancy has grown more in Europe against a per capita healthcare expenditure that has grown much less than in the United States — a sign, according to Pugno, that Europe converts material resources into effective well-being more efficiently. The article does not, however, hide a cause for concern: since 2012 the cognitive skills of fifteen-year-olds (mathematics and reading) would be declining both in Western Europe and in the United States, a signal that, if not corrected through investment in human capital, risks undermining Europe's well-being advantage over the long term.

In short: the narrative of a Europe that is irremediably poorer and "behind" the United States holds up only if one looks at a particular metric of nominal growth, and it disregards both purchasing-power adjustments and — above all — the non-monetary dimensions of well-being: economic security, inequality, life expectancy, leisure time. And it is precisely on this second plane — that of living well, not merely producing more — that a migratory phenomenon increasingly affecting Italy takes hold.

The Quiet Exodus: Why Americans Are Relocating to Italy

The flow of US citizens to Europe is no longer a niche phenomenon. According to recent estimates, over 1.5 million Americans currently reside on the continent, and the most up-to-date Istat data count 17,650 US citizens legally resident in Italy as of January 1, 2025, up 6.7% on the previous year — an increase of more than 2,000 people compared to 2020, which makes Americans the second-largest English-speaking community in the country after the British one. Nearly half of this community is concentrated in three regions with very different profiles: Lazio (Rome, for reasons linked to embassies and pontifical universities), Lombardy (Milan, growing more rapidly, driven in part by high-net-worth individuals), and Tuscany, where Florence alone counts 1,229 US residents and Americans represent 0.60% of the region's foreign population, the highest share in Italy.

The reasons behind this choice are more nuanced than the simple aesthetic appeal of "La Dolce Vita." On one hand, "push" factors carry weight: recent surveys record that a quarter of Americans have considered relocating abroad, with spikes in online searches linked to specific political events; added to this, for a growing share of the population, is the unsustainability of private US healthcare costs, worsened this year by the expiration of the Affordable Care Act's enhanced tax credits, which has driven up insurance premiums for millions of families. On the other hand, distinctly Italian "pull" factors carry weight: a significantly lower cost of living, a real-estate market that in villages and the countryside still allows homes to be purchased at prices hard to imagine in an American urban context — even around 50,000 euros in many rural areas of Tuscany and other regions — a pace of life perceived as less competitive and more centered on the quality of relationships, and a public healthcare system accessible at contained costs even for those not automatically entitled to it. It should also be noted that the landscape of opportunities has recently changed on one specific front: Law 74/2025, upheld by a ruling of the Constitutional Court in spring 2026, has narrowed access to Italian citizenship by descent to only the children and grandchildren of Italian citizens, effectively closing one of the most popular routes that millions of Americans of Italian descent had until now used to obtain a European passport. This makes the ordinary immigration route — visas, residence permits, tax residency — now even more central.

Residence Permits: Which Path for a US Citizen

Not being citizens of the European Union, US nationals must necessarily obtain, before entering Italy for stays exceeding 90 days, a national visa (a "D" visa) from the Italian consulate with jurisdiction over their place of residence, to be converted into a residence permit (permesso di soggiorno) within eight working days of entering the country. The main available routes are:

Elective residency visa and permit. This is the most commonly used route for those relocating without the intention of working in Italy — typically retirees or individuals with income from investments or pensions. Governed by Article 11 of Presidential Decree 394/1999 implementing the Consolidated Immigration Act, it requires the availability of accommodation in Italy (purchased or leased under a registered contract) and the possession of stable, continuous financial resources not derived from employment — generally no less than approximately 31,000 euros per year for the applicant, documented through tax returns for the preceding three years. The holder of this permit may not carry out any work activity, whether employed or self-employed, in Italy. The permit is initially valid for one year, is renewable, and requires the holder to actually reside in Italy for at least half of the validity period; the most recent administrative case law has clarified that the authorities must verify the genuine intention to settle in Italy, in order to prevent the instrument from being used instrumentally. After five years, one may apply for the EU long-term resident permit, and after ten years, for citizenship by naturalization.

Work visas. For those instead intending to work in Italy, there are the employment visa (which requires prior issuance of a nulla osta by the Sportello Unico per l'Immigrazione [Single Immigration Desk] at the request of the employer, within the limits set by the annual quota decrees) and the self-employment visa, for those wishing to start a professional, artisanal, or commercial activity or to establish a company, provided they meet the same professional requirements required of Italian citizens for the same type of activity.

Investor and innovative start-up visa. For those with capital to invest, the regulatory framework provides for permits linked to investment plans for developing activities in Italy, tied to the availability of at least 50,000 euros for one's own innovative start-up or 250,000 euros in another company, or to an annual income from non-employment sources of at least 32,000 euros.

Digital nomad visa and other minor permits. Italy has activated, like several other European countries, a dedicated channel for highly qualified remote workers, in addition to the traditional visas for study purposes or family reunification.

In all cases, once the residence permit is obtained, the next step is registration with the civil registry (anagrafe) of the municipality of residence, which opens the way to an Italian identity card and access to public services, including healthcare.

Enrollment in the National Health Service

One of the greatest sources of appeal that Italy holds for US citizens is precisely the cost-benefit ratio of its healthcare system. Those who hold a residence permit for employment or self-employment, for family reasons, or other equivalent categories are entitled to mandatory, free enrollment in the National Health Service (SSN), with equal treatment to that of Italian citizens.

Those instead holding an elective residency permit — the most common category among American retirees who relocate without working — do not fall among those subject to mandatory enrollment, but may opt for voluntary enrollment, paying an annual flat-rate contribution that grants entitlement to the same benefits provided to Italian citizens, including the choice of a general practitioner. This contribution, previously set at 387.34 euros, was raised by the 2024 Budget Law to 2,000 euros per year for foreign nationals generally not entitled to mandatory enrollment (700 euros for students and religious personnel), a non-divisible amount to be paid per calendar year to the competent local health authority (ASL). Alternatively, it is always possible to take out private health insurance valid in Italian territory — an obligation that in any case applies to those seeking family reunification for a parent over sixty-five, unless otherwise enrolled in the SSN. Even at 2,000 euros a year, the comparison with the cost of comparable private health coverage in the United States remains clearly favorable for the retiree who relocates permanently.

The Tax Regime for the US Citizen Resident in Italy

This is where planning requires the greatest care, because the US citizen resident in Italy finds themselves at the intersection of two tax systems that follow different principles.

Italian tax residency and worldwide taxation. Those who transfer their residence to Italy — and reside there for the greater part of the tax period according to the criteria of Article 2 of the TUIR (Consolidated Income Tax Act), as reformed by Legislative Decree 209/2023 (civil registration, domicile as the seat of personal relationships, predominant physical presence) — become subject to the principle of worldwide taxation: all income, wherever produced, must be declared and taxed in Italy, subject to the provisions of the Double Taxation Convention.

The Italy-US Convention. Signed in Washington on August 25, 1999 and ratified by Law 20/2009, the bilateral Convention governs the allocation of taxing rights between the two states. A point of particular relevance for retirees concerns Article 18: pensions of US origin — including Social Security benefits and distributions from 401(k) and IRA plans, as confirmed by the Italian Revenue Agency (Agenzia delle Entrate) — received by a person who is a tax resident of Italy are, as a general rule, taxed exclusively in Italy, thereby avoiding double taxation on the same income.

The 7% flat-rate regime for foreign pensioners (Article 24-ter TUIR). For those who receive a pension paid by a foreign entity and transfer their residence to a municipality in Southern Italy (Sicily, Calabria, Sardinia, Campania, Basilicata, Abruzzo, Molise, Puglia) with a population not exceeding 30,000 inhabitants — a threshold raised from 20,000 by Law 34/2026 — or to one of the municipalities in Central Italy affected by the 2009 and 2016-2017 earthquakes, it is possible to opt for a substitute tax of 7% on all foreign-source income (not only the pension, but also dividends, interest, rental income, and capital gains from foreign sources) for a period of nine years. The preliminary condition is that the applicant must not have been a tax resident of Italy in the five tax periods preceding the transfer, and must come from a country with which Italy has administrative cooperation agreements in tax matters in force — a condition undoubtedly satisfied in the case of the United States. Any Italian-source income remains outside the favorable regime and subject to ordinary IRPEF (personal income tax).

Obligations toward the US tax authorities. What complicates planning for the American citizen — unlike, for example, a British or German retiree — is the principle of citizenship-based taxation: the United States taxes its citizens on worldwide income regardless of place of residence, and in any case requires the filing of a federal income tax return (Form 1040), even though this does not necessarily generate additional tax owed thanks to the foreign tax credit for taxes paid in Italy. Added to this are reporting obligations: the Report of Foreign Bank and Financial Accounts (FBAR, FinCEN Form 114) is due when the aggregate balance of financial accounts held in Italy exceeds 10,000 dollars at any point during the year, while Form 8938 (FATCA) applies at higher asset thresholds for those residing abroad. On the Italian side, the US citizen must also complete Schedule RW (quadro RW) for reporting assets held in the United States and must assess the application of IVAFE (the tax on financial assets held abroad) on foreign accounts. The FATCA mechanism, operative in Italy since 2014, requires Italian banks to identify accountholders with indicia of a US connection and to transmit their data to the Agenzia delle Entrate, which in turn forwards it to the IRS: an accountholder who refuses to provide self-certification risks having the account closed. It is therefore a common, and potentially costly, mistake to underestimate these reporting obligations by assuming that paying taxes in Italy exhausts every obligation toward the United States.

Conclusions

The comparison between American and European growth, when conducted with the correct statistical tools and supplemented with non-monetary well-being indicators, presents a Europe that is less "in decline" than the dominant narrative would suggest — albeit with a genuine warning sign concerning human capital and the skills of the younger generations, a concern shared, moreover, by both sides of the Atlantic. It is against this backdrop — one of economic security, lower inequality, and a perceived higher quality of life — that the choice of a growing number of US citizens to relocate to Italy takes shape: not necessarily a flight from crisis, but rather a considered life choice, made concretely feasible by an accessible real-estate landscape, a public healthcare system with contained costs even for those who access it voluntarily, and a tax regime — the Double Taxation Convention above all, and the optional 7% regime for those settling in the small municipalities of Southern Italy — which, if correctly planned with the assistance of a professional with specific expertise in Italy-US cross-border taxation, can make the relocation advantageous without exposing the taxpayer to the risk of double taxation or penalties for failure to comply with reporting obligations in either jurisdiction.