Further updates about the important changes to the treatment of rental income in Italy mentioned below – the new Airbnb law.
Recent legislation (D.L. 50/2017) introduces new rules on tourist rentals, which are defined as those of under 30 days.
As of 1st June 2017 there will be an option to have the gross rental income taxed at a fixed rate of 21% under what is known as the “cedolare secca”. No costs are allowed against this income. We should make clear that for those who rent out their property directly, without using online portals or other intermediaries, this is only an option, so there is nothing to prevent you continuing to declare the rentals as you have to date.
However, the legislation also imposes an obligation on all intermediaries, which includes not only estate agents but also online portals such as Airbnb and (we imagine) HomeAway/Owners Direct, Booking.com etc, to provide the Agenzia with the relevant information regarding the rental contracts. In addition, where the intermediary also receives rental payments on behalf of the owner, they are obliged to deduct 21% in withholding tax from the rental receipts. This will be forwarded to the Agenzia as an advance on the tax owed on the rental income.
Clearly the aim of the legislation is primarily to tackle tax evasion: earning extra income through short term rentals of Italian property has proved very popular and equally difficult for the Agenzia to regulate. The popularity of tourist rentals is also increasingly seen as representing unfair competition to other forms of accommodation business. The new system also provides a degree of clarity in a field which has to date been far from unambiguous. It has always been very unclear at what stage a rental activity would be considered by the Agenzia as constituting a commercial business, which would require registration for IVA. Here at last is a firm indication that short term tourist rentals can be carried on without registering for IVA, so welcome clarification on this point. The downside is that no costs are allowed against the income, so the 21% tax is payable on gross receipts.
It is unclear at the moment whether the online portals will comply with these new requirements, but as the law is due to come into effect so soon it is important that all involved in this activity are aware of it. In brief, for those who do not use online portals or letting agents, the situation has not necessarily changed: you can opt for the cedolare secca or continue as you have done to date.
Those of you who do make use of online portals or other intermediaries would be well advised to get in touch with your contact at the relevant agency and ask what plans they have to change their practice in view of the new Italian law.