What Happens If You Fail to Transfer Residence Within 18 Months After Claiming the Italian “Prima Casa” Tax Relief?
Many purchasers of Italian real estate seek to benefit from the reduced registration tax rate available under the prima casa regime.
The “prima casa” relief is currently contained in Article 1 of Part One of the Tariff annexed to Legislative Decree No. 123 of 1 August 2025. The reduced 2% registration tax rate applies where the conditions set out in Note I are satisfied. Under paragraph 1(a) of Note I, one of the principal requirements is that the property is situated in the municipality in which the purchaser already has residence or establishes residence within eighteen months of the purchase. Other conditions apply. Establishing residence in this context means registration with the Anagrafe – the register of Italian resident population.
The Italian “Prima Casa” Tax Relief
Background
Many purchasers of Italian real estate seek to benefit from the reduced registration tax rate available under the prima casa regime.
The “prima casa” relief is currently contained in Article 1 of Part One of the Tariff annexed to Legislative Decree No. 123 of 1 August 2025. The reduced 2% registration tax rate applies where the conditions set out in Note I are satisfied. Under paragraph 1(a) of Note I, one of the principal requirements is that the property is situated in the municipality in which the purchaser already has residence or establishes residence within eighteen months of the purchase. Other conditions apply. Establishing residence in this context means registration with the Anagrafe – the register of Italian resident population.
The “Claim” for Relief
The notary involved in the sale and purchase is responsible for registration tax and payment to the tax authorities. The notary files the deed, self-assesses the tax and pays it to the Revenue Agency, recovering the amount from one or both of the parties (usually the purchaser). Many notaries require payment of the tax upfront before stipulating the deed. The Agency can subsequently issue an assessment if the self-assessment proves to be incorrect.
Typically Italian notaries will insist on the purchaser making a declaration in the deed to the effect that the purchaser considers that the conditions for the application of the reduced prima casa tax rate are satisfied, possibly giving an undertaking to transfer residence withing the 18-monthg window.
This is precisely to enable the Notary to demonstrate that they applied the reduced rate on the basis of the purchaser’s statements and not on the basis of an independent judgment by the notary.
Loss of the Prima Casa Relief
A question frequently is: what happens if the 18-month deadline is going to be missed or if has already been mised?
Where the residence requirement is not satisfied within the statutory 18-month period, the purchaser loses entitlement to the tax relief.
The Italian Revenue Agency may then issue an assessment seeking recovery of:
- the difference between the reduced tax originally paid and the ordinary tax due;
- late payment interest; and
- administrative penalties.
In practice, the Revenue Agency is usually able to verify compliance relatively easily by checking municipal residence records.
Correction
Correction Through Ravvedimento Operoso < 18 months?
A failure to register can simply be corrected by filing a ravvedimento operoso declaration paying the extra tax, interest and penalty before the 18-month period has expired, and before the tax authorities have initiated proceedings to recover the extra tax.
The article cited above contains an indication of the penalties due, under the current post-2024 penalty regime. The effective rates there apply in a similar way for registration tax. However it is advisable for the exact calculation and the F24 payment forms to be prepared with professional assistance.
Applicable Interest Rates can be viewed here.
After the 18 Months have Expired
Once the statutory 18 month term has passed and the conditions for the relief have not been met, the matter generally becomes one of decadenza dall’agevolazione (loss of the relief).
The Revenue Agency will normally issue an assessment in its own name. After the 18 month term it is in the view of the Tax agency no longer possible to apply the Ravvedimento Operoso procedure.
The standard administrative penalty is generally 30% of the additional tax due, together with interest.
However, taxpayers who accept the Revenue Agency’s assessment and make prompt payment may be entitled to a reduction in the assessed penalties under the rules relating to acquiescence (acquiescenza).
The precise reduction available will depend on the legislation in force at the time and the procedural circumstances of the case.
Should the Taxpayer Notify the Revenue Agency?
Some taxpayers prefer to notify the Revenue Agency once they become aware that the residence condition has not been met.
Others simply wait to see whether an assessment is issued.
It is our view that the most appropriate approach is to advise the Tax Agency such that the Agency can proceed to issue the assessment after which payment can be made, with application of reduced penalties under the acquiescenza (prompt payment) procedure, thereby closing the issue.
Force Majeure
Liability to Tax
The Italian Supreme Court has recognises a Foce Majeure exception, where the taxpayer was simply unable to respect the 18 month deadline for reasons outwith the taxpayer’s control. But it defines force majeure very narrowly.
The most common case is where building works or renovations are not completed, and/or where occupation permits have not been issued. Another example is where archaeological remains are discovered delaying completion of building works. Existing tenants failing to vacate the property can also render the property unavailable for occupation, making registration as resident at the property difficult, if not impossible.
The Court has shown that it will not admit a force majeure argument unless the justifying event is:
- not attributable to the taxpayer;
- unavoidable; and
- unforeseeable.
The Court has also denied a force majeure exception on the grounds that the legal obligation is to transfer residence to the municipality, not to the particular purchased property. The taxpayer could have rented or occupied another property in the same municipality and registered there.
We are not aware of case law dealing with a possible force majeure exception in a situation that can sometime arise in an “expat” situation namely where the taxpayer is unable to register as resident due to timescales involved with a citizenship/application the immigration and in the presence of the often applicable position where application for registration with the Anagrafe pending issue of a valid stay permit (permesso di soggiorno).
In the light of the court decisions referred to above these circumstances may help explain why residence was not established within the required period, but they do not automatically preserve entitlement to the tax relief. However we feel that there is a possibility that the Supreme Court might look favourably at the force majeure argument, providing that all the conditions are met, the taxpayer has occupied the property as their primary residence and is entitled to reside on Italian soil.
Each situation must be assessed on its own facts.
Liability to Penalties
Apart from the liability to the extra tax, there is also, a separate, but connected issue, namely whether a force majeure could be used as a basis simply to exclude the late payment penalty. This takes into arguments udner the general sanctions regime and udner the Taxpayer’s Charter. Under the general sanctions regime penalties may not be applied to those have committed an action due to force majeure.
Article 10 Taxpayer Charter provides that if a taxpayer acts because of:
- conduct of a public authority;
official guidance; - administrative guidance,
sanctions can in some circumstances be reduced or excluded.
Practical Considerations
Establishing a force majeure argument, either to escape lability to extra tax or reduce liability to penalties is an uphill take in practice. The Tax Agency will in all probability not be open to any argument against a full assessment. The Agency must simply follow the rules – you either met the 18 month deadline to register or you did not.
It is therefore likely that appeal would need to be made against a Tax Agency assessment to recover the extra tax and penalties. that will generally necessarily mean a potentially significant investment in professional fees for an initial opinion on the position and support with the conduct of proceedings, , court costs as well as a risk of paying the costs for the Tax Agency to defend their position, if you are unsuccessful.
Check Other Tax Issues
Where a purchaser has lost the prima casa relief, it is often sensible to review other aspects of their Italian tax position at the same time, including:
- IMU and TARI liabilities arising since the date of purchase;
- Italian tax residence status under the statutory tax residence tests.
- Italian income tax filing obligations;
It is important to remember that registration with the municipal Anagrafe is only one factor relevant to Italian tax residence. A person may, in many circumstances, be regarded as Italian tax resident even where Anagrafe registration has not taken place.
Conclusion
Like any italian tax relief, claiming the benefit depends on checking very carefully the very specific applicable rules ahead of any decision to claim or apply the Relief. these conditions are normally stringent )to prevent abuse) and are applied rigidly. Failure to meet any of the conditions usually leads to extra tax, interest and penalties being applied with the possibly only of what can often be no more than a speculative chance, of a successful appeal to the Courts.
Need Assistance?
If:
- you have purchased real estate in Italy and are not going to register within the 18 month period;
- the 18 month period has passed, or
- you have received an assessment from the Italian Revenue Agency in relation to the loss of prima casa relief,
we can assist with:
- reviewing your position;
- liaising with the Tax Agency;
- reviewing penalty mitigation options;
- managing payment, ravvedimento and compliance procedures; and
- consulting on related IMU, TARI and income tax/residence issu