Property Tax – Italy

When you buy a property, you are liable for tax in Italy. Below is an overview of the tax system for property in Italy.


Property Tax

The basic property tax in Italy is known as “IMU” (Imposta Municipale Unica). Everyone who owns a land or a property in Italy, whether they are resident or non-resident, must pay this tax which is usually between 0,2% and 0.76% on the total declared value of the property. The amount depends on the local authority and the size, location and category of property you purchase. If the property is passed as uninhabitable or being restored, the tax is reduced by 50%.

The IMU is paid in two instalments - 90% by the 30th of June each year and 10% between the 1st and 20th December. If the tax is not paid on time, a surcharge of up to 200% can be levied.

Income Tax

Whether or not you are resident in Italy, as a property owner you must still make a tax declaration. The Italian authorities are only interested in any income you may have accrued in the country, for example you may have money on deposit in a bank that is receiving interest. They have no interest in any holdings you may have outside of Italy.

Tax on Rent Received

If you rent out the property you must declare the income you receive. Against this you can deduct expenses you have had in maintaining the property. The tax is usually between 19% and 46%.

Notional Income Tax

You will also be taxed on the rental value of your house, even if you don't rent it out. This tax is based on the rateable value of the property and is usually very small.

Garbage Collection Tax

In some towns, an additional tax is raised to deal with services the town hall supplies. These could include rubbish collection, street and beach cleaning. In some municipalities you will be charged for use of a car in the area, but not in all. These taxes vary between €200 and €250 per year.

Capital Gains Tax

Capital Gains Tax (CGT) For Individuals

Please note that the CGT payable by individuals, not carrying out a business activity from the purchase and resale of real estate units is subject to Italian income tax, whether they are tax resident in Italy or abroad.

Therefore the profit will be considered as an annual income and will be taxed based on the following scale :

0 - 15.000 EUR

23%

15.001 - 28.000 EUR

27%

28.001 - 55.000 EUR

38%

55.001 - 75.000 EUR

41%

Above 75,000 EUR

43%

Please note as well, that no CGT is due in Italy if the property is owned for more than 5 years, unless the Real Estate premises is land on which a unit was built. In this case the sale will be considered as commercial activity and will be subject to CGT even if the vendor is not a professional.

CGT For An Italian Company

Once again the profit will be taxed as an annual benefit made by the company and will be subject to corporate tax. Therefore the profit made by an Italian company from the sale of a resale unit will be subject to a 27.5 % rate to which another 3.9 % will be added, corresponding to local corporate tax.

CGT For An Overseas Company

The tax rate applicable to the resale of any Real Estate unit owned by an overseas company is 33 % of the net profit. Once again if the property was purchased more than 5 years prior to the sale, no CGT is due.

Wealth Tax

While in many other European countries you may be liable for wealth tax, in Italy there is no such tax.

Inheritance Tax

Even as a non-resident your estate will pay inheritance tax. The amount will vary according to closeness of the relationship of the heirs to the deceased. We advise you to seek professional information on how to best deal with this tax.

UK-Italy Tax Treaty

There is a double tax treaty between Italy and the UK and this protects the investor from paying tax on his Italian assets in both countries.

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