On Christmas Eve 2019 the Budget for the year 2020 (Legge di Bilancio) was approved by the Italian Parliament, a raft of rather disparate provisions. The law came into force on 01.01.2020. Unfortunately, there are very few presents for property owners.

Most of the current tax rebates (Bonus fiscali) for property owners who improve their properties or install energy efficient equipment /utilities have been confirmed. A new tax rebate was introduced for property owners who clean, restore or redecorate the façade of their buildings / blocks of flats (Bonus facciate). This is a new tax rebate of up to 90% of the cost of cleaning /restoring / redecorating the façade of buildings actually paid for in 2020. It can be applied as a deduction from Italian Income Tax due over the next 10 years in equal instalments.

Unfortunately, the recently introduced “Sconto in fattura” (Direct discount on invoice) has been repealed, so that it is no longer possible to ask for an invoice discount from the contractor who actually carries out the work, in exchange for a transfer of the relevant Bonus Fiscale / tax rebate.  So, if you do not have Italian taxable income, you cannot benefit from these provisions.

Of some interest is the merger of TASI a local tax on Italian properties raised by local authorities (Comuni) to cover indivisible public services, with IMU, the Italian Council Tax.

Originally, in 2014 TASI and IMU were two different local taxes, however in the last few years TASI had become almost a duplication of IMU. Because of this TASI (which was levied at the base rate of 0.1%) has now been abolished. But there is no real benefit to the Italian property owner, because the base rate of the new IMU has been raised from 0.76% to 0.86%. At the end of the day the overall rate of tax payable has not changed. On the contrary, the tax burden has been slightly increased, because whereas it used to be possible to charge a share of TASI on tenants and other persons in occupation of Italian properties, the whole of the new IMU will now be payable by the owner.

Furthermore, Local authorities are now permitted to increase the IMU base rate by up to 1.06%, so that the overall new rate of the new IMU could be increased to up to 1.14% each year.

Italian Parliament, Rome

Italian Parliament

Italian local authorities (Comuni) are now restricted in the range of variations they can introduce in their districts to the basic regime in the national legislation. In a way, this is a positive development as it will make it easier for the taxpayer and his professional advisers to work out the tax due and payable. This is in line with the declared aim of the new legislation, simplification without changing the overall tax burden.

It will no longer be possible for both spouses to have a main residence (Abitazione principale) each, exempted from IMU. Only one residence for each family, actually used by the family and registered with the authorities as such, will qualify for the exemption. Most farmers (Coltivatori diretti and Imprenditori agricoli professionali) are exempted from IMU tax. Listed buildings (Fabbricati d` interesse storico e artistico) are only subject to IMU at 50% of the applicable rate. The same applies to dilapidated buildings (Fabbricati inagibili).

Like the earlier version, the new IMU is payable by the 16th June and 16th December of every year, in two equal instalments. Taxpayers may, however, elect to pay the whole tax in June of each year. Again, the new IMU will be levied on the land registry value of the property (as appears at the local land registry) multiplied by 5 % and then by a coefficient  (usually: 160) which depends on the classification of the property in question.

Of some interest for foreign owners of Italian properties is a new provision, whereby it will be possible to pay IMU tax electronically, rather than in the usual, time consuming way by attending at a bank or the local post office. A website has been launched “PagoPA” to receive all payments to Italian public authorities, which should enable taxpayers to pay IMU and other local taxes, by bank transfer or credit card, on the internet. Considering that future legislation will introduce practical assistance to Italian and foreign taxpayers, to determine the amount of tax and how to pay it, this is a real improvement.

TARI, a tax raised to cover refuse collection will remain unchanged.

The special Italian capital gains tax applicable to the sale of Italian property (Imposta sostituiva dell` imposta sul reddito) sold within 5 years of purchase, is raised from 20% to 26%. Thus, it iseven better now than before, to wait at least 5 years from the date of purchase before selling Italian property. In case of residential property, the sale after 5 years is potentially exempt from tax.

Several other measures have also been introduced, which are not of immediate interest to the Italian property owner.

Thankfully, the rate of Italian VAT (IVA) will not be increased.

A “Plastic tax” at the rate of Euro 0.45 per Kilo of “single use” plastic produced or used is introduced to discourage the abuse of plastic (use and throw away). A “Sugar tax” at the rate of Euro 10 per 100 litres of artificially sweetened drinks is also introduced, to discourage the use of these drinks / obesity. A web tax (Imposta sui servizi digitali) is introduced, while changes are made to IVIE and IVAFE, two Italian taxes levied on land and properties owned by Italian residents abroad (outside Italy).

Meanwhile, according to recent statistics, the Italian property market is slowly recovering.

Dr Claudio Del Giudice – 24.01.2020 Copyrights reserved.