Italy: Taxes and Costs

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Rental income tax is high in Italy

INDIVIDUAL TAXATION

Non-residents are taxed only on their income from Italian sources. Married couples may be taxed separately depending on the conditions in the marriage contract. Non-residents are only allowed to avail of some of the deductions and credits that are available to residents.
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INCOME TAX (Imposta sul Reddito delle Persone Fisiche [IRPEF]

Non-residents are liable to pay taxes on their Italian-sourced income. Taxable income is generally an aggregate of all forms of income, less the expenses related to acquiring and maintaining income and allowed deductions.

These rates may be increased by a regional surtax that ranges from 0.9% to 1.4%. A municipal and a provincial surtax are also levied, at rates determined by the municipalities and provinces, at an aggregate of 0.8%.

Non-residents may avail of deductions for medical and surgical expenses, mortgage interest payments and gifts to charitable institutions up to 19% of the taxable income.

Rental Income

Non-residents renting out property in Italy are liable to pay taxes on their rental income. Taxable rental income is generally computed as rental income less a lump-sum deduction of 15% for repair and maintenance expenses. Taxable rental income cannot be less than 85% of the gross income. The normal income tax rates are then applied to the computed taxable rental income.

Capital Gains

Gains from the sale of real property held for more than five years are not taxable. Gains from the sale of property held for less than five years are taxed as income. Capital gains are computed as selling price less acquisition costs and related expenses.

CORPORATE TAXATION

INCOME TAX

Corporate rental income is taxable in Italy. The taxable amount is computed as gross income less a lump-sum 15% deduction for maintenance and repair costs. The computed taxable income is then taxed at the corporate income tax rate of 33%.

Capital Gains

Corporate capital gains are not taxed separately, but taxed at the normal income tax rates. Taxable capital gains are computed as selling price less acquisition costs, depreciation and transaction costs.

PROPERTY TAX

Municipal Real Estate Tax

A municipal real estate tax is imposed on the estimated value of a property, depending on its classification under their rules, multiplied by a given multiplier, which varies according to the type of the property. The rate is set annually by each municipality and ranges from 0.4% to 0.6%.

Italy - more data and information

• Guide to buying houses and registering property sales in Italy

Your Comments

posted by malcolm willis | 2008-03-18

therapist, ireland

posted by Jon Israel | 2008-04-08

Builder, italy

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