Italy Investment Property – Tax Planning
Italy’s tax system can be complicated and it is important to consult an expert tax advisor when considering your Italian property investment. Here you can obtain a brief guideline to Italy’s property tax system.
Italian property tax, ICI, is charged to anyone who owns land in Italy and this is charged at between 0.4 and 0.7% depending upon the local authority and the size, location and category of property you purchase. If the property is classed as uninhabitable or it is being restored, the tax is reduced by 50%.
ICI is paid in two installments – 90% by the 30th June each year and 10% between the 1st and 20th December. If the tax is not paid on time, a surcharge of up to 200% can be levied.
Tax on Rental Income
Tax is charged on income received from your property rentals in Italy and you can deduct from this any of your expenses for property maintenance. The rate can be anything from 19% to 46% depending on the property and rental conditions.
Capital Gains Tax
Italy has not charged capital gains tax since 1993 and instead it is incorporated into the ICI.
Unlike many other countries, Italy does not charge a wealth tax.
If the property is purchased from an individual, the rate is 11% of the government valuation. The value of the property is not the purchase price itself, but the figure assessed by the local tax office and it is calculated from official tables.
UK-Italy Tax Treaty
There is a double tax treaty between Italy and the UK and this protects the investor from paying tax on his Italian assets in both countries.