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.