Taxation of Italian property
Local Taxes
There are two local property taxes in
Italy which are both based on the
property's theoretical rental value
according to the local land registry,
and is adjusted in line with inflation.
The rates of tax will vary from region
to region due to the varying rates of
tax imposed by the regional and local
governments.
Imposto municipale or Imposta
Comunale sugli Immobili (ICI)
There is a local municipal property
tax called Imposta Comunale surgli
Immobili (ICI), and is paid by
anyone who owns property or land in
Italy, whether they are a resident or
non-resident. The amount of the tax is
calculated by reference to the "rendita
catastrale" (official value of the
property) registered in respect of all
properties in Italy. The official values
were, until recently, very very low.
They are now rapidly rising, pursuant to
a policy of the Italian Government that
will result in the official values
approaching the real value of the
property. It is approximately 0.4% -
0.7% of the official value of the
property. The actual rate being decided
by the local authority depending on the
size of the property, location, class
and category. If a property is unfit for
habitation it could qualify for a 50%
reduction. ICI is paid in two
installments in June and December.
Tassas Comunales
Some Municipalities raise additional
taxation in relation to the services
that they supply to people in the area.
These may include rubbish collection,
cleaning of the streets and beaches etc.
Municipalities also have the right to
raise a charge for the use of a vehicle
in their area. Not all do so. The
amounts of these charges are not
generally high, and should be between
€200 and €250 per year.
Personal Taxes
As a non-resident property owner in
Italy, you may be liable for income tax,
value added tax wealth tax, capital
gains tax and inheritance tax.
Individual situations vary considerably
and it is best to seek specialist advice
from a tax consultant who has knowledge
of the Italian tax system.
Income tax (Imposta sul Reddito
delle Persone Fisiche (IRPEF))
A person not resident in Italy for
tax purposes must still make an annual
declaration for income tax. The Italian
Authorities are only concerned with the
income you derive from activities in
Italy, not your world-wide income.
Typical examples of this will be
interest on any money you have on
deposit with a Italian bank or income
you derive from letting your Italian
property. If you let your Italian
property you will have to declare the
income received. You will be able to set
off certain expenses against that income
– repairs, management expenses, local
taxes etc. The residue is taxed at
between 19% and 46%, depending on the
amount. For most people it will be about
30%. As this income is part of your
world wide income it will have to be
declared to the country where you live,
but double taxation relief does exist as
a result of a Treaty between the two
countries. You do not need to file a tax
declaration if you have no income in
Italy.
Notional Income Tax
There is also a tax to pay upon the
notional rental value of your house,
even if you do not actually rent it out.
This is based on the official rendita
catastrale (rateable value). It is
normally small.
Capital gains tax (imposta
sostitutiva sulle plusvaenze)
As from January 1st 1993 capital
gains tax on the sale of property or
land no longer exists, and has been
replaced with an annual tax on property
called ICI (Imposta Comunale sugli
Immobili) which is defined above.
Wealth tax
Unlike most of the other European
countries, there is no wealth tax in
Italy.
Inheritance tax
Both residents and non-resident
property owners are subject to Italian
inheritance law, with the amount of tax
paid varying depending on the
relationship between the deceased and
the heirs.
For Legal & Taxation
advice, International Mortgage Network recommends that you
contact a specialist adviser: |
