The new Italian law 96/2017 approved on June 15, 2017 introduced some chances to the vacation home rentals. The new law is intended to reduce the tax avoidance related to the rental incomes. This has not an impact on the the tax level but only on the way taxes are paid and who has the responsibility to pay them properly.
In this article we explained the applicable taxes to the Owners of a property in Italy. They apply to both resident and nonresident, Italian and Foreign owners.
AS IT WAS before the new law 96/2017
Until June 15, 2017 foreign Owners were subject to:
– Local taxes (Council tax and Waste tax) to be paid for the current year
– Government tax: 21% of the gross rental income to be declared and paid by June of each year with reference to the rental income of the previous year.
The government tax was calculated by the Italian accountant while making the tax return once a year.
AS IT IS with the new law 96/2017
With the new Italian law 96/2017 of June 15, 2017, starting for the rentals from September 12, 2017 the intermediary (authorized real-estate rental company as well as web portals such as Airbnb, Booking.com, HomeAway, etc) is requested to keep the taxes on the rentals income and transfer them to the Italian Revenue Agency on behalf of the Owners.
This new law is trying to avoid the tax evasion of many small private Owners by moving the tax avoidance responsibility from the Owner to the intermediary.
As a result any rental company (both Italian and foreigner ones) are requested to transfer to the Italian Revenue Agency the 21% of the Gross rental income on behalf of each Owner. This money transfer shell be done by 16th of the next month after the stay.
If the payment is directly done by the Guest to the Owner, then the responsibility to pay the taxes remain on the Owner.
The Italian Revenue Agency has defined the Gross rental income as the total price paid by the Guest, which also include any costs related to the rental, such as electricity, water, gas, linen, cleaning, commission for vacation rental company – if paid by the Owner). This means the 21% tax also applies on the commission paid to the rental company for the service provided. In case the commission for the vacation rental company is not charged to the owner but it is charged to the guests, then it can be excluded by the Gross rental income subject to the 21% tax.
The new laws also make the City tax mandatory for private vacation homes. However the city tax is applicable only is some specific towns as it is a local decision. The actual applicability shell be checked case by case based on the address of the vacation home.
References:
DECRETO LG 24/APRILE/2017 N.50
Comunicato stampa Agenzia delle Entrate
Provvedimento 132395/2017 dell’Agenzia delle Entrate
Immobili in Italia di residenti all’estero: le problematiche
Are you interested to learn more? Feel free to contact me.
Massimo Valentini
President
Puglia Paradise Srl
By mail: massimo.valentini@pugliaparadise.com
By cell (IT): +39 333 568 3861
By cell (UK): +44 20 3239 7476
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