If you have decided that you want to rent out your house in Italy (i.e., short-term leases), there are certain obligations that must be taken into account in accordance with Italian laws as well as international tax law.

Investing in real estate in Italy with a view to future rental income is becoming increasingly common. Short-term tourist lets have risen sharply in Italy in recent years. Renting out your property in Italy is actually a good extra income, especially as tourism in Italy continues to grow exponentially. Moreover, it should be added that at the moment it is still possible to buy nice houses at a good price and the rental prices are more than satisfactory in relation to the investment costs.

NOTE. In the following, we do not take into account all the details concerning double taxation issues between Italy and landlord’s country as well as the taxation levied on income from Italy in landlord’s country.

INDEX

1. When a lease can be considered “short-term”
2. Advantages and disadvantages of choosing a “short-term lease”
3. Form of the Italian rental contract
4. Short-term lease not to be registered with Italian tax authorities
5. Fiscal obligations (taxes and income declaration in Italy)
6. Registration of the tenant’s data in the Italian police website “Alloggiati Web”
7. Notification of the activity to the Italian municipality
8. Other information regarding additional services to tenants

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1) When a rental contract can be considered “short term” in Italy

What does short-term lease mean?

According to the Italian Tax Law (art. 4 of Decree Law no. 50/2017), a letting can be considered a “short-term letting” if the duration of the rental contract does not exceed 30 days (30 days refers to one person for the whole year). Short-term rental contracts are for residential (and non-commercial) use only and must be concluded by natural persons.

The short-term rental contract differs from the other Italian types of rental. For indicative purposes, we list only three types:

• ordinary lease “a canone libero” which has a duration of 4 years plus another 4 years renewable;
• “transitional lease – ad uso transitorio” which has a maximum duration of 18 months;
• “renting to university students” the duration of the contract is a minimum of 6 months and a maximum of 3 years.

* NOTE! According to the law n. 178/20, in case of renting out more than 4 properties, the exercise of the activity must be changed into a tourist activity in entrepreneurial form.

2) What are the advantages of taking out a short-term rental contract in Italy?

– The landlord does not commit for a long period of time as in a normal rental contract (4 years);
– the rental contract does not need to be registered with the Italian tax authorities;
– no registration tax or stamp duty is required;
– fixed tax of 21% of the rent.

You must
– register tenants’ details on the police website within 24 hours;
– notify the municipality of tenants’ details (only applies to certain municipalities).

3) Form of the Italian rental contract

For short-term rentals, no specific form of contract is required. However, the contract must contain certain information such as the identification of the tenant and the landlord, the property details, the purpose of the contract (i.e., state that it is a short-term lease), the obligations of the tenant and the landlord, the duration, the amount of the rent and other charges.

The rental contract must be signed upon the guest’s arrival. The tenant must also provide a copy of his/her passport or ID card. A copy of the document is necessary to allow the landlord to register the guest’s details in the police website (see below point 6).

4) Short-term rental contracts should not be registered with the Italian Tax Agency

Short-term rental contracts, i.e. a rental contract where the duration does not exceed 30 days, do not need to be registered with the Italian tax agency “Agenzia delle Entrate”. This means that the landlord does not have the burden of paying registration tax (imposta di registro) and stamp duty (Imposta di bollo).

Can I still choose to register short-term rental contracts with the tax authorities?
You can register the contract with the tax office. If at registration the application of a fixed tax rate of 21% is chosen, called “cedolare secca” (see below point 5), registration tax and stamp duty will not have to be paid.

NOTE: Registration is always compulsory if you choose to enter into an ordinary rental contract or another form of rental contract that provides for a term of more than 30 days.

5) Fiscal obligations of the landlord (taxes and income declaration in Italy)

The landlord is obliged to declare the rent and consequently pay tax on it. An income tax return showing the rental income received must be submitted to the Italian tax authorities even though the landlord is resident in abroad, i.e. not domiciled in Italy.

NOTE: Failure to submit or forgetting to submit the declaration in Italy can have serious consequences (high fines) which vary according to the period of delay. In this case, you should urgently contact an accountant or a lawyer in Italy in order to settle your tax position before an inspection for tax purposes takes place. In this way, the case can be settled through the reduction of penalties/fines.

Regarding taxes on rental income in an international context, they are primarily paid in the country where the property is located. The person receiving the income from abroad may still be taxed in their home country. It is therefore always necessary to assess the international double taxation conventions. The double taxation agreement between Italy and the landlord’s country may provide for the recognition of a deduction to the latter in order to avoid the payment of the same tax in both countries.

With regard to taxation in Italy, the landlord has the possibility to choose between two different paths:

1. include the income in their Italian annual income tax return. Income tax in Italy starts from a rate of 23%. (NOTE! this choice is particularly suitable for resident in Italy);
2. pay an alternative flat tax of 21%. This option is called “cedolare secca” and constitutes a fixed taxation. It shall be calculated on the full annual rental amount as specified in the contract (GROSS AMOUNT). This choice should be made directly when drawing up the Italian income tax return or when registering the contract with the tax office. It is recommended to turn to a local Italian accountant.
   (NOTE! Flat taxation is a good solution for those who are not resident in Italy).

6) Registration of the tenant’s data on the Italian police website “Alloggiati Web”

In accordance with Italian law (Article 109 T.U.L.P.S.), the landlord is obliged to register (via the web) the tenants’ details on the police website “Alloggiati Web“. This obligation applies to both EU and non-EU guests.

Registration of guests’ data in the police portal will be completed:

– within 24 hours of the guest’s arrival in case the stay is longer than 24 hours;

– within 6 hours of the guest’s arrival in case the stay is shorter than 24 hours.

How do you register your accommodation and guests?
The landlord must first contact the police headquarters “QUESTURA” located in the province concerned to obtain the login details. You can also request login details by email.

Here you can search for the address of the police headquarters in your province:
https://alloggiatiweb.poliziadistato.it/PortaleAlloggiati/Contatti.aspx

After activating the service, the landlord can log in to the police web portal “Alloggiati Web” and register his tenants. For each registration you receive a receipt that must be kept for 5 years.

Here is the link to the Alloggiati Web site:
https://alloggiatiweb.poliziadistato.it/PortaleAlloggiati/Default.aspx

7) Notification of the activity to the municipality

The Italian municipality (or region) in which the property is located may require the landlord to notify its activities and the details of its guests even if they are not carried out in the form of a registered business activity (company).

Rules vary between municipalities or regions. It is recommended to contact the municipality (or check on the website of the regional administration) before starting the activity.

8) Other information regarding additional services to tenants

It should be noted that:

– the additional services allowed are only those linked to the rent, i.e., changing bed linen/towels and cleaning the property.

– if you offer additional services such as breakfast or food then you have to change the activity to a “different” business form like B&B, affittacamere, countryhouse, etc.

The post Guide to short term rentals regulations in Italy appeared first on S&P Law Firm in Italy.

The subject would require a long explanation, especially if we were to consider all individual cases even in the context t. ex. with tax deductions, additional income generated in Italy (due to renting their home in Italy or commercial activities), residing in a property other than the one owned. We therefore try to simplify the answer by providing general information.

In this case, we are also considering only private properties, not rented and not those considered as luxury homes.

It should also be noted that:

• houses abroad (in our case…in Italy) can be subject to property tax also in the owner’s country of residence
• every Italian real estate (house or land) has a specific value according to the land register, it is called in Italian “rendita catastale“. The value can be found in the land title (visura catastale) or in the purchase contract. This value is used to calculate all taxes on real estate;
• in Italy, the municipal property tax (IMU) generally replaces the income tax for natural persons (IRPEF) related to real estate not rented. This means that when you pay municipal property tax (IMU) you do not have to pay income tax (IRPEF) on the value of the property and consequently, if you have no other income apart from the property, you do not have to submit an income declaration to the Italian tax agency “Agenzia delle Entrate”.

As indicated in the question, it is necessary to distinguish cases where the owner is resident in Italy from those where he is not.

RESIDENCE ABROAD (i.e. not tax redicence in Italy) + income declaration abroad

If you own one or more properties in Italy, the owner (or the usufructuary) must pay every year the municipal property tax (IMU) to the Italian tax agency “Agenzia delle Entrate”. This means that no income tax return has to be submitted in Italy.

Don’t forget that in addition to the property tax (IMU), there are also another municipal tax (TARI) that the owner must pay. More details on the annual property taxes can be found on this article >>>

RESIDENCE IN ITALY + income declaration in Italy

1) A property owned

If you own a property in Italy and you are registered there (i.e. tax redicence in Italy), you do not have to pay the property tax IMU. You also do not have to pay the personal income tax (IRPEF) on the value of the property.

In practice, the value according to the land registry (rendita catastale) must be declared in the Italian income tax return, but since the law in this case allows to deduct the entire value from the total taxable value, it means that no income tax is paid on the property.

2) Two or more properties located in different Italian municipalities

For example, if you own two properties located in two different Italian municipalities and you are registered in one of the two properties, then the situation is as follows:

• property 1 in municipality A where you are registered => see point 1);
• property 2 (not rented) in municipality B => you only pay the municipal property tax (IMU).  Consequently, no income tax (IRPEF) is payable on the value of the property.

3) Two or more properties located in the same municipality

For example, if you own two properties located in the same municipality and you are registered in one of the two properties, then the situation is as follows:

• property 1 in municipality A where you are registered => see point 1);
• property 2 (not rented) in municipality A => in this particular case the general rule does not apply. This means that you have to pay both the municipal property tax (IMU) plus a reduced income tax (IRPEF) on the assessed value (income tax is only paid on the 50% of the assessed value). For more details on the calculation of the tax, we recommend contacting us directly or getting in touch with a trusted Italian accountant.

NOTE: The reduced assessed value must be added to other income. Depending on the level of all income, different tax rates are paid (23%, 25%, 35% and 43%).

NOTE: If the property is rented out, different rules apply and, in addition, an income tax return must be filed in Italy even if the owner is resident abroad.

The post Own one or more houses in Italy. When an income tax return is required? appeared first on S&P Law Firm in Italy.

The TV fee is 90 €/year and is called “Canone RAI”.

NOTE: From July 2016, the TV fee will be paid directly in the electricity bill. This means that you will pay the fee and the electricity with the same bill. The amount is divided into 10 monthly installments from January to October. The Italian Tax Agency (Agenzia delle Entrate) controls all payments.

Here’s how it works:

• The TV fee is paid per household.
• It doesn’t matter if you are registered in Italy or not. Everyone who owns a house and a TV should pay the fee.
• You only pay an annual fee (90/€) even if you own several televisions or several homes in Italy.
• If you rent a house in Italy for a longer period of time, have a TV set and draw up an Italian electricity contract in your name, you must also pay the TV tax.

There are 3 exceptions for not paying the fee:

1. if you don’t own a TV;
2. if you are at least 75 years old and have an annual income of no more than EUR 6 713;
3. others (including diplomatic agents, military personnel with non-Italian nationality, etc.).

If you do not own a television, it is important that you communicate this to the Italian Tax Agency. The request is made through a paper form sent by post to the Tax Agency (do not forget to also attach a copy of a document confirming your identity, such as your passport) or through an online request via the Tax Agency’s website (this service requires registration).

NOTE: The request must be sent every year or the charge will automatically appear on your electricity bill.

Here is an example for the year 2022:
=> requests sent by 31 January 2022 will exempt you from paying the fee for the whole of 2022;
=> requests sent between 1 February and 30 June 2022 will exempt you from paying the fee for the second half of 2022 (from July to December 2022).

The same deadlines apply for future years.

As the charge is automatically linked to the electricity bill, there is a risk that you will have to pay the charge when you buy a house in Italy, even if you do not own a TV.  So, if you have bought a house in Italy and drawn up an electricity contract don’t forget to send the request to the tax office every year.

The form is called “Dichiarazione sostitutiva di non detenzione” and it must be filled in with your details on the first page. In Ram-A (Quadro A) on the other side, you state that you do not have a TV.

Here is an explanation of how to fill in the form:

Tv-licence form – page 1	Tv-licence form – page 2

Here you can download the form directly from the Tax Agency (Agenzia delle Entrate):

>>> download the form in pdf format <<<

The request by post must be sent by an Italian REGISTERED MAIL  (posta raccomandata), without envelope, to the following address:

Agenzia delle Entrate – Ufficio Torino 1 Sat
Sportello Abbonamenti TV
Casella Postale 22
10121 – Turin

Ask for information or assistance at the post office.

If you need more detailed information, please contact us via the web form.

The post How to avoid paying the €90 Italian TV fee in your electricity bill appeared first on S&P Law Firm in Italy.

1. municipal property tax, called IMU;
2. waste tax on property, called, TARI;

A third tax called TASI was in effect until 31 December 2019. It was a municipal service charge on property. (NOTE! This tax was abolished in 2020).

On the municipal property tax IMU:
the new owner is not obliged to send any “paper” to the municipality.
Tax is paid twice a year, partly in June (advance payment) and partly in December (the balance).

NOTE: The owner does not receive any bills.

Each year, the owner must calculate the amount to be paid on his own. You can pay the tax at the bank using the “modello F24” form or at the post office using a “bollettino postale”. The template must be filled in with your details.
We recommend contacting an accountant or a “CAF”. CAF is an association that offers services such as calculating property taxes, etc.

Regarding the TARI waste tax:
the municipality should count the amount. The owner receives the bill by post.
The owner can choose to pay the fee in different parts of the year. The payment date varies between municipalities. It is also possible to pay the tax in full at once by 16 June.

Regarding the TASI municipal service charge (abolished):
it is easier because the municipality calculates the amount. The fee is invoiced twice a year, a part in June and the rest in December.
NOTE: This tax was abolished in 2020.

The post Annual property taxes in Italy. We have not received any bills appeared first on S&P Law Firm in Italy.