Tax Module – How to Confidently Buy Property in Italy

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Real Estate

Taxing.It Guide to Buying Property in Italy

Participant Questions

  1. I have read about a “new incentive for retired foreigners” which is a 7% flat tax on foreign income if you have lived outside Italy for the previous  years…., does that apply to 401K and social security payments?  What exemptions of this law are there?

Flat Tax for pensioners coming to live in the of South Italy – Now 9 years

 

  1. Does the USA have a Tax Treaty with Italy, such as the Tax Information Exchange Agreements (TEIA) and what does that all cover?

Yes it does

https://www.irs.gov/businesses/international-businesses/italy-tax-treaty-documents

 

  1. If we buy now and rent out as a holiday rental, and visit a couple of times per year, are the property taxes different for us than for residents of Italy?

If you opt for flat tax there is no difference as regards taxes on income.

  1. Can you explain the “Foreigners Pension Regime”?  From what I read, it is available for up to six years after that the rate goes up from 23% to 43% depending upon income.  Is that correct?

See answer 1. It is now nine years.  The income tax rates are actually a bit higher because of the regional and comunal taxes

  1. Can you please explain the VAT?  What are all of the places where it applies and what are all of the figures that they are based on?  How are properties distinguished regular from luxury and what are the differences in the VAT tax for each?

Ha ha this would need another day.  VAT is a goods and sales type tax. More info on Italian Tax Agency site:  https://www.agenziaentrate.gov.it/portale/web/english/nse/business/vat-in-italy

It applies on sales of new residential property by the developer or construction company.

All property in Italy is registered at the catasto and designated a category. List of urban residential real estate categories here:

https://www.money.it/categorie-catastali-elenco-completo

  1. What are all of the places that residency/Non-residency matters as far as tax implications, or differences?

1)  Purchase tax /VAT

2) Tax on capital gain on future disposal

3) Local property taxes

 

  1. What restrictions do foreign buyers (from the USA) have that others may or may not have?

From the USA apart from US tax reporting requirements

  1. If you could use a 100,000 Euro apartment as an example,  can you walk through what the costs and taxes that someone from the USA would incur if they will remain a non-residents for the next 6 years?

How long is a piece of string. Also purchase price is not important the important aspect is the valore catastale

8. Under indirect taxes:

It says a typical transaction = a prelim deposit at the time of the offer being made, a contract being drawn up and at  completion (title deed)

9. Does this mean 1/3 of the purchase price at each of those stages?

No – the exact amount will depend on what has been agreed – there is no set rule.

Vat on the sale (I note the circumstances) but it also says that the selling business could treat the sale as Vat exempt.

10. Under what circumstances could this happen.  Example if I buy an agricultural piece of land but do not intend to continue with a commercial (agricultural) venture, just small scale farming for for personal and or Tourist lodge use , could this constitute grounds for lower taxes?  Do I then need to change land status?  Would any Euro 1 farms with (example) olives or fruit be subject to the 10% tax (euro 1 = disused/derelict)

Yes. Farmland and rural building have a special purchase tax regime – 15% of value, with a significantly reduced rate if you are a registered farmer

SPECIAL REGIME OF   TAXATION FOR AGRICULTURE
For the registration of deeds involving the transfer of agricultural land (and related appurtenances) in favor of subjects (natural persons or agricultural companies) who cover:

– the qualification of direct farmer (registered in the relative social security and welfare management),

– the qualification of professional agricultural entrepreneur (IAP) (registered in the relative social security and welfare management),

the following taxes apply:

  • Registration tax: Fixed (currently € 200.00)
    Transcription tax: Fixed (currently € 200.00)
    Cadastral tax: 1%
    Registration tax not due

 

What are the chances of one NOT being granted residency and what is the surcharge of not granted within 18 months

It depends on the facts. The comune typcially check that you are inf act residnet by sending a police office  and/or making other enquiry.

What is non dom? And what tax changes are we talking about?  Is this non domicile i.e. not residing on the property?

Non dom is a UK law concept.

What is a public deed versus any other type of deed

A public deed is one that is drawn up by a notary

Occupancy tax

IMU                       What % or Euro and how does one self assess

https://www.amministrazionicomunali.it/imu/calcolo_imu.php#

TASI                       Same question

https://www.amministrazionicomunali.it/tasi/calcolo_tasi.php

TARI                       What is this monthly charge

TARI – Tax on waste

The waste tax (TARI) is the tax intended to finance the costs relating to the waste collection and disposal service and is payable by anyone who owns or holds, for whatever reason, premises or uncovered areas likely to produce the waste.

Help is available through web sites.  First port of call is the local authority (comune) and the visura catastale.  You comune may well have a web site with this information on it eg. http://www.comune.assago.mi.it/site/home/articolo9015794.html

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