The second instalment of IMU Tax (Imposta Municipale Propria – Italian Council Tax) will shortly be due. This tax introduced only last year, has already undergone an extraordinary range and extent of changes, and may change again, before it is due. Under recent legislation Town Councils (Comuni) have been allowed to change their IMU Tax regulations (setting out the rate of tax and exemptions) up to the 9th December 2013. So within five working days, Italian and foreign taxpayers will have to study these new regulations, calculate and pay the IMU tax due on their Italian properties. Of course any late payment is sanctioned by fines.
Foreign / non-resident owners of Italian properties will stand very little chance unless they both prepare on time and act promptly.
IMU Tax is due on the value of properties, in two instalments, in June and December of every year and replaced both the earlier Italian Council Tax (ICI) and Italian income tax (IRPEF) on the ownership of properties (except where a property is let).
This tax is levied (with some exceptions) on the updated land registry (Catasto) value of properties, in compliance with a national legal framework, but also in accordance with local regulations. These local regulations, issued by local Town Councils (Comuni) state the rate of this tax (which may range between 0.76% and 1.06%) and any exemptions and reductions applicable within a specified district. There are over 8,000 Comuni in Italy.
Italian Town Councils are required by law to publish their IMU Tax regulations on their websites by the 9th December 2013, thus leaving precious little time for taxpayers to comply.
IMU Tax is both highly complex and very local. Town flats and homes are normally charged, unless they are the taxpayer`s main residence (Abitazione Principale), this is meant to indicate the property where the taxpayer and his family actually live. Exemptions are also granted to any other areas around the main residence which are permanently connected and used with the dwelling (Pertinenze), such as garages, storage areas and other covered areas. To make things more complicated, new regulations provide that an additional tax (called mini-IMU) will be payable in Italy, by property owners on their main residence, at a reduced rate, by the 16thJanuary 2014 where particular conditions apply.
Listed buildings (Immobili storico – artistici) and dilapidated buildings (where the formal planning requirements have been complied with) are taxed at a reduced 50% rate of IMU Tax.
Commercial buildings such as shops and offices are also taxed, but local Town Council regulations may provide a 0.4% rebate where the property is owned by a commercial enterprise, in view of the other taxes entrepreneurs and commercial companies are currently charged in Italy.
Complex rules have been introduced for farm buildings and agricultural land. These properties used to be exempt from IMU Tax without further specification. This is no longer the case. Agricultural land will be subject to tax unless it is actually owned, used and occupied by a professional farmer. Farm buildings are exempt only if actually used for the purposes of farming. Rural dwellings can be exempted by local regulation only if they are used by farmers and their employees for more than 100 days a year. In all other cases IMU Tax will be due. Where land has planning permission (Aree edificabili ) IMU Tax will be levied on its market value, again special rules apply.
In Italy IMU Tax (Council Tax) is paid by the landlord and not by tenants. Exceptionally, where a property is let, a landlord will also be required to pay Italian Income Tax (IRPEF) on the potential rent he should have collected (whether or not the rent was actually received) and this explains some of the problems of the Italian letting market.
The second instalment of IMU tax must be paid by the 16th December 2013, either at an Italian bank with a special tax form (Mod. F24 ) or at an Italian post office (bollettino postale).
Last year the Italian Ministry for the Economy and Finance issued regulations intended to facilitate non resident IMU taxpayers. Under these regulations, non resident taxpayers are required to calculate the IMU due on their Italian properties, and then to contact their Town Council (Comune) in order to find out details of the bank account where this tax may be eventually paid. Full details of such payment, the taxpayer and the property in question need to be also sent to the relevant department of the local Town Council in question. This is going to be rather difficult if the foreign taxpayer does not speak Italian and is not prepared to spend some time on the telephone searching for the relevant local authority department.
It is probably quicker to instruct an English speaking lawyer or other local professional in England with a network of correspondents in Italy. The problem with this, however, is that there are other Italian tax deadlines falling close to the 16th December 2013 deadline and overworked Italian accountants (Commercialisti) are considering a period of national industrial action. He who has time, should not waste time.
Post Script If IMU tax was not paid on time, it is possible to pay late, provided no assessment / notification has been issued by the relevant local authority. It is possible to pay IMU tax with interest at the official rate (tasso legale) and a reduced penalty of 3%, up to the 16th January 2014.
Between the 16th January 2014 and the 30th June 2014 the penalty is increased to 3.75% of any IMU tax paid late. Meanwhile, the official rate of interest payable will be reduced from 2.5% to 1% with effect from 1st January 2014.
A total exemption from penalties may soon be available. Under current legislation being considered by the Italian Parliament, in view of the complications in the calculation of IMU tax, no penalties will be due if the correct amount of tax is paid by 16th June 2013.
Copyrights reserved – Dr Claudio Del Giudice 05.12.2013