After a long debate, the new property tax “IMU” (Imposta Municipale Propria) replaced “ICI” tax (Italian Council Tax) and  was due in Italy by the 16th June 2012. Just the June 2012 instalment itself, was expected to raise almost 10 billion Euro revenue.

IMU tax was first introduced last year to decentralise taxation, increase resources to local authorities and empower local people to the running of their own district (Federalismo). It was supposed to actually come into force in 2014. With the new Government, the framework of this new tax was changed and IMU tax was brought into force earlier than expected. Contrary to the original plan, a 50% share of all the revenue (except for the IMU due on taxpayer`s main residences) will devolve to the central government. IMU results in a massive increase of property taxation in Italy.

This new tax is levied at two rates 0.4 % on the value main residences and 0.76% on the value of most other properties. Local authorities can slightly change these rates within their district by + or – 0.2%, by issuing local regulations. However as far as the first instalment was concerned, due by the 16th June 2012, the standard rates (0.4% and 0.76%) were applicable. Revised rates may apply for future instalments, depending on the regulations issued by the relevant local authority.

The main residence (Abitazione principale) reduced rate of tax (0.40%) is only applicable to actual, habitual abode (Dimora) of the taxpayer and his family, provided this appears on public records (Residenza anagrafica). Each family can only have one “Abitazione principale “. Previously, under the “ICI” tax, the main residence was not taxed.

This reduced rate will also apply to any subordinate, supportive property units / areas (Pertinenze), but only if they fall within defined land registration classification (units classed as C/2: storage rooms / cellars, C/6: garages / parking spaces or C/7: cantilever rooves or porches) and then only one of such units will be allowed to be taxed at a reduced rate for each main residence. From the tax actually payable on the main residence a standard Euro 200 deduction is allowed, plus a further deduction of Euro 50 for each child (less than 26 years old) living in the family, up to an overall maximum deduction of Euro 400.

The standard 0.76% rate applies to most other properties in Italy.

For most residential units, IMU tax will be levied on a statutory property value, calculated by multiplying the land registry income (as it was in the official Italian land registry records for the relevant property on 01.01.2012) by 5 and then by 160. Different figures apply to offices, factories and shops.

For the first time, agricultural land will also be taxed in Italy.

IMU tax is reduced by 50% in the case of listed buildings (Edifici d` interesse storico o artistico) or dilapidated properties which are unfit for human habitation (Fabbricati inagibili o inabitabili) or farm buildings in mountain areas.

In the case of farming land, progressive reductions of the rate of tax apply for stated values of the land in question, but only if a professional farmer cultivates it.

Further reductions may be allowed by local authorities (Comuni ) provided there is no negative influence on their overall budget. So local authorities are expressly allowed to exempt or reduce IMU tax payable on the former residence of elderly people living in a nursing home or the main residence in Italy of Italian nationals living abroad within their district. It remains to be seen how the current budget and financial problems of Italian central and local authorities will allow for such niceties.

IMU tax can be paid in two 50% instalments, the first was due on 16th June and the second will be payable by the 17th December 2012.

Exceptionally, where it relates to taxpayers main residence IMU tax can be paid in three instalments (16th June, 17th September and 17th December). Given that the 16th June 2012 was a Saturday, the deadline to pay the first instalment was automatically extended to the following working day, Monday, 18th June 2012.

LIFE AFTER THE 18th JUNE 2012

If IMU tax was not paid within the statutory deadline, it is possible to pay late as follows:

  • Payment within 14 days from 18.06.2012 – IMU tax will have to be paid with a 0.2% penalty plus interest at the rate of 2.75
  • Payment within 30 days from 18.06.2012 – IMU tax will have to be paid with a 3% penalty plus interests at the rate of 2.75%
  • Payment by 18.06.2013 – IMU tax will be payable with a 3.75% penalty plus interest at the rate of 2.75%.

Meanwhile the Government has issued reassuring statistics on the June 2012 IMU tax collection. A total of Euro 9.551 billions IMU tax was paid in June 2012, notwithstanding threats of refusals to pay this tax / civil disobedience. This amount is substantially in line with the Authorities` expectations.

Only a small percentage (4%) of all taxpayers failed to pay IMU tax. This is probably, mostly due to taxpayers in financial difficulties or to unusual circumstances, rather than to “classic” tax evaders.

Claudio Del Giudice – 08.07.2012 Copyrights reserved