Italy: compatibility of holiday rental with condominium regulations

In Italy there are many tourist resorts. Even cities like Milan, Naples, Turin enjoy a remarkable tourist attendance. Real estate is not expensive, often less than 1500 € per square meter. On the other hand, demand for short-term rental in almost all the many tourist locations is growing. This is why more and more foreign Italian investors are buying apartments for short-term rentals, or holiday rentals. The compatibility of the holiday rental with the condominium regulations At the same time, there is also an exponential growth in neighborhood complaints from occupants of the same co-ownership to those who deal with this type of entrepreneurial activity. The rules: where are we in Italy? Despite the many legal interventions in this area, in our country, a precise orientation on the nature of b & b and short-term rental activities still seems to be lacking. As explained in a recent article by Sole 24 Ore, it is generally necessary to prohibit these activities in the stipulated co-ownership regulations or regulations; it can also be expressed by a resolution adopted by the co-owners with the consent of all the participants. The same procedure must also concern the resolution of the clause to be included in the current regulations prohibiting the co-ownership operation of this type of activity. In all cases, these are clauses that must be written clearly and explicitly. When, for example, the regulations prohibit the use of the property in question for activities other than residential, the possibility of proposing temporary rentals within the apartment is excluded. Anyone who wishes to use their property for temporary rental purposes should not rely solely on regional laws for the exercise of activities of bed and breakfast or vacation rental: he should   first take into consideration those relating to contractual regulations or conventional condominium by-laws, which override regional legislation.

2019 house improvement reductions in Italy

Higher rates confirmed for retrofit deductions and energy savings. Tax relief also for furniture and new gardens. One more year to renovate the house with a maxi-reduction of 50%. From construction works to equipment, the finance law has postponed all deadlines to 12 months. Slip also for the ecobonus, for which it is possible to implement energy saving measures by recovering 65% on the Irpef. Renovations. The 50% rate provided for the deduction for exceptional maintenance and renovation work will therefore apply to all expenses by the end of the year. Maximum ceiling for each apartment confirmed at 96,000 euros. The deduction allowed even if the payer is the cohabiting partner of the family member, and in the case of de facto couples. Indispensable to use the dedicated bank on which you must expressly indicate the tax code of the person who will use the deduction. In fact, banks have the obligation to communicate these data to the tax authorities in order to refine the precompiled declaration, so that the creation of text only contains these data. We must therefore pay the utmost attention to the establishment of the transfer. In case of energy saving interventions paid with the transfer for renovations such as change of lighting, purchase of air conditioners or gas boilers, photovoltaic panels, pellet stoves, you must also send a communication to ENEA on the site dedicated to renovations, within 90 days of completion of the work. The mobile bonus. Who renovated the house last year or is about to do it now can also count on furniture and appliances. In this case, the maximum cost is 10,000 euros and must take into account what you have already spent last year for the same apartment. Compulsory payment with traceable instruments (bank transfer, credit card, debit card), but it is not necessary to use a bank transfer dedicated to restructuring. Anyone who buys appliances (oven, refrigerator, washing machine, hotplates) must send the communication to Enea within 90 days of purchase. The green bonus. For those who decide to refurbish the walk or terrace, the specific facilitation is in effect, namely the deduction of 36% on a maximum expenditure of 5,000 euros. Even those who have the “green thumb” will have to turn to a gardener, because facilitation is not allowed for DIY work, for example the simple purchase of plants and planters, but only for the renovation of green places to create new gardens, install irrigation systems. In these cases too, payment is required with traceable instruments but not with a dedicated bank transfer. Ecobonus. Another 12 months to take advantage of 65% or 50% reduction rates for energy saving interventions The higher rate applies to jobs that provide higher savings, such as insulation, the replacement of heating systems by condensing boilers equipped with thermo-valves, solar panels. 50% bonus instead for new appliances, sun protection, biomass boilers. In this case also, for the obligatory payments, the transfer dedicated to the ecobonus and the deduction inserted directly in the pre-filled declaration. The condominium works. With the same rules are also confirmed the tax breaks condominium works, including the green premium. In this case, however, all the bureaucracy is charged to the administrator.

House purchase by auction: the first home bonus is valid

The application for tax relief for the purchase of the first house must be made before the transfer order. Buying an auction house can be a big plus. With the online auction portal, you can stay informed of the progress of judicial sales of all assets attached or for which bankruptcy proceedings are ongoing. Research may be limited to houses located in a specific geographic area and within specific price limits. You should almost never participate in the first sale because, in the event that the auction is deserted (that is, in the absence of bidders), at subsequent auctions, the judge may order a reduction of 25%. This is certainly a speculative attitude that is in the end very often the goal of those who buy at auction. In addition to the normal rebate in relation to the market price, home buyers can also benefit from the first housing bonus, ie the tax advantage reserved for those who buy real estate – the first real estate – in the municipality where they have their home or transfer it 18 months after the purchase. A recent decision of the Sondrio Provincial Tax Commission confirmed this. The pronunciation has the important merit of establishing what you need to do to use the first home bonus on the auction purchases. Let’s see more in detail what was said. We do not need to repeat, in this article, all aspects of tax relief for the first home, including the IMU exemption, the property tax. Just remember that it applies to those who have never benefited from the same bonus before and have no other property in the municipality where the house to buy is located. You can get the bonus if you transfer your home within a maximum of 18 months from the purchase in the municipality where the house is located. The first home bonus Does the first home bonus apply to real estate purchases at court auctions? When claiming the first home home bonus for forensic sales? The first home bonus The bonus brings a significant advantage in terms of paying taxes. If the seller is an individual or a company that sells VAT-free, you pay: Proportional register fee of 2% (instead of 9%); Fixed mortgage tax of 50 euros; Fixed register tax of 50 euros. If the seller is a company, with a sale subject to VAT (typical of the manufacturer), you pay: VAT reduced to 4% (instead of 10% VAT for buildings A / 1, A / 8 and A / 9 is 22%); Fixed registration fee of 200 euros; Fixed mortgage tax of 200 euros; Fixed register tax of 200 euros. Does the first home bonus apply to real estate purchases at court auctions? The first house bonus also applies to those who buy a property at auction at the courts. But beware: in order to benefit from the subsidy, it is necessary that the application to benefit from the benefit is presented before registration of the transfer decree with the relevant tax agency. Later, it is impossible to get the bonus. This is the clarification provided by the Sondrio CTP. When to apply for the first house bonus for judicial sales? The judge pointed out that auctions can certainly benefit from the first housing subsidy if the taxpayer declares that he wants to make use of the facilitation at the same time as he asks to be auctioned. This declaration can therefore also be inserted later, with a supplementary act, even after the publication of the decree of transfer, but with the insurmountable delay of the moment of registration of this decree with the Revenue Agency. On this point, the Supreme Court also agrees that it has adopted the same interpretation in the past. Therefore, if the application for use of the bonus is submitted after the registration of the transfer decree, there is no longer any possibility of obtaining the tax benefit.

Real-estate investment tax savings for Italian citizens residing abroad

1) UP-FRONT TAX SAVINGS UPON THE PURCHASE OF A PROPERTY IN ITALY 1a) Requirements These tax savings apply to anyone (national or foreigner) who buys a “Prima Casa” in Italy. The tax savings amount is significant and pegged at 7% (i.e., 2% instead of the 9% ordinary tax rate) of the cadastral value of the property, not the transaction price. Although there can be substantial variations on the difference between the cadastral and commercial value of Italian properties, cadastral values usually fall in the 40%-60% range of the commercial values (source: OMI – Osservatorio Mercato Immobiliare, Italian Ministry of Economy and Finance). Please note that the normal conditions for a property to classify as a “Prima Casa” and thus for the buyer to be advantaged of these up-front tax savings are that: 1) he/she does not already own any other residential property in the same Italian municipality; 2) he/she did not already benefit from “Prima Casa” relief when purchasing another residential property in Italy; and that 3) the property becomes his/her “Main Residence”, which implies that the buyer has to transfer his/her residence to the municipality where the property is situated within 18 months from the date of purchase. For Italian nationals officially residing abroad and registered with AIRE (“Anagrafe dei Cittadini Italiani Residenti all’Estero”), however, although the first two conditions still apply, the third condition does not apply, which means that they are NOT required to move their residency to the property’s municipality to qualify for a “Prima Casa” tax relief. Finally, the “Prima Casa” tax savings apply to any Italian residential property except for those coded as A/1, A/8, and A/9 on the cadastral registry. Please note that these properties only constitute about 0.2% of the entire Italian residential assets (source: OMI’s Cadastral statistics, 2017). 1b) Upfront tax savings – Example For a property with a market value of e.g., Euro 1,000,000 and a corresponding cadastral value of Euro 500,000, the law would allow for an up-front tax saving of Euro 35,000 (i.e., 7% of the cadastral value). 2) ADDITIONAL ANNUAL TAX BENEFITS FOR ITALIANS RESIDING ABROAD 2a) Requirements Section 9 –bis of Law Decree 47/2014, effective from 2015, has introduced further tax benefits to Italian nationals residing abroad who purchase a “Prima Casa” in Italy.  These benefits include a full exemption from the IMU (“Imposta Municipale Propria”) and a 67% tax reduction on the TARI/TASI (“Other municipal properties taxes”). The law states that these further benefits apply to “one property unit only, owned by Italian nationals registered with AIRE, who are retired in their states of residence, providing that such property is not rented or given in use to third parties”. This means that, beyond the conditions that define a “Prima Casa” stated above, two additional requirements must be met to benefit from further tax relief: 1) the owner must receive a pension from his/her country of residence (this condition leaves out Italians who, having moved abroad after retiring, receive an Italian pension); and 2) the property must not be rented out or given in use to third parties. Please note that a potential Italian resident living abroad can therefore benefit with two options: a) buying the property as a “Prima Casa”, benefitting from the municipal tax savings (i.e., IMU, TARI/TASI) but without being able to rent; or b) buying the property as a “Prima Casa”, paying the full IMU/TARI/TASI taxes, but with the option of renting it out. Please note, however, rental taxes amount to 21%. 2b) Upfront and annual tax savings – Example (cont’d) For a property with a market value of e.g., Euro 1,000,000 and a corresponding cadastral value of Euro 500,000, the law would allow for an up-front tax saving of Euro 35,000 (i.e., 7% of the cadastral value) and annual municipal property tax savings of about Euro 5,000 in IMU tax (i.e., full exemption) and Euro 3,500 in TARI-TASI tax (i.e., 67% exemption). Based on these estimates, the present value of the up-front savings of Euro 35,000 and annual tax savings of Euro 8,500 would amount to about Euro 74,000 (i.e., 7.4% of the original investment) over the first 5 years of ownership of the property, Euro 107,500 (i.e., 10.75%) over the first 10 years, Euro 136,500 (i.e., 13.65%) over the first 15 years, and Euro 161,500 (i.e., 16.15%) over the first 20 years of ownership. Values discounted based on the 3% Italian government long-term bond yields. We are experts in Italian real estate law and our practice is happy to provide and determine each individual’s qualification for the legislated tax benefits and best assure each client captures the maximum tax benefits under the law.

Buying a house in Italy – taxes to pay, fiscal aspects

When you have to buy a house, you must keep in mind certain tax aspects. Let’s see what they are depending on whether you buy a house from a construction company or an individual. As noted by the National Council of Notaries, the purchase and sale of construction or renovation companies, except in special cases, are subject to VAT, which is paid directly to the seller. The VAT rate to be applied on the sale price will be: Equal to 10% in the absence of first housing benefits; Equals 4% if first home benefits are requested. The same tax treatment is applied to the allocation of housing to members of a housing construction co-operative. In the case of a purchase subject to VAT, the following taxes will also be paid to the notary, who will then pay it to the Tax Agency (Agenzia delle Entrate): Registration fee: 200 euros. Mortgage tax: 200 euros. Cadastral tax: 200 euros. If, on the other hand, you buy a house from individuals, the registration, mortgage and registration taxes are paid by the buyer to the notary who will in turn pay them to the Tax Agency (Agenzia delle Entrate) during your registration. In the absence of facilitations: Registration fee: 9%. Mortgage tax: 50 euros. Cadastral tax: 50 euros. Rates are normally applied to the stated selling price; in the case of transfer of residential properties to natural persons, the buyer may request payment of the registration tax on the “cadastral value” (value-price) of the property (i.e. the resulting value of the multiplication of cadastral income for the legal coefficient, which is 115.5), regardless of the actual amount of the sale price, even if it is higher than this value. The minimum tax is always € 1,000. In the presence of subsidies for the purchase of the first residential house: Registration fee: 2%. Mortgage tax: 50 euros. Cadastral tax: 50 euros. Rates are normally applied to the stated selling price; in case of transfer of residential properties to natural persons, the buyer may request the payment of the registration fee (imposta di registro) on the “cadastral value” (value-price) of the property (i.e. the resulting value of the multiplication of cadastral income for the legal coefficient, which is 115.5), regardless of the actual amount of the sale price, even if it is greater than this value. The minimum tax is always € 1,000.

Veneto is the most visited region in Italy, thanks to the sea

Veneto in the European top 10 with nearly 18 million Italian and foreign visitors in 2016 Sea, Dolomites and Venice: it is the triptych that makes Veneto the most visited Italian region, the only one of the top ten in Europe. On the one hand, there is the coast of the province of Venice, from Bibione to Rosolina, through the large number of pearls like Jesolo Lido and Caorle: miles of beaches that have nothing to envy to those of Emilia Romagna, which are traditional destinations of Austrians and Germans, who start to frequent them from May. On the other hand there are the Dolomites, a UNESCO World Heritage Site, the “pearl” Cortina d’Ampezzo and mountains like the Crystal, the Marmolada or the Three Peaks of Lavaredo, chosen by a growing number of foreigners for hiking and walk in the woods. From the ‘jewel’ Venice to the Prosecco hills In the middle there are villages and cities, starting from Venice, which alone is worth more than 20 million presences, which occupy all the year the hotels between the streets and San Marco then go all the way to Murano, Burano and the other islands of the lagoon. But then, they move to see Giotto’s works in Padua, Palladio’s work in Vicenza or to touch Juliet’s boob in Verona, a classic lucky ritual that is repeated every year by thousands of people who visit the city by reliving the emotions of Shakespeare’s work, and perhaps by watching that represented at the Arena. At the gates of Verona, in recent years, tourism is growing on Lake Garda, where more and more visitors arrive each year. Then there is the thermal tourism, with places like Abano and Montegrotto, near Padua, and the gastronomic and oenological tourism, wooed by the Prosecco boom, whose hills have recently been nominated World Heritage by Unesco. In 2016, record number of tourists On the other hand, in 2016, there was the record number of tourists: arrivals were 17,856,567 (+ 3.5%), with foreigners 11,525,916 (+ 2.8%) and Italians (6,330,651 + 4, 7%); total attendance 65,392,328 (+ 3.4%), with 43,961,624 foreigners (+ 4.1%) and 21,430,704 Italians (+ 1.8%). If we look at the turnover, tourism is the most important industry in Veneto, with revenues exceeding $ 17 billion. Figures that could be retouched, again, up: on the beaches, indeed, summer started right and June also saw double-digit increases in different places. And if during the winter the snow did not help the skiers, no less people went to Cortina or the other Dolomites, thanks to the massive investments of the last years for the artificial snowing of the slopes, which fall between breath-taking views. A unique scenario, to the point that the Tre Cime area was chosen for certain filming of the new movie Star Wars, the eighth of the saga: tourism in Veneto, it should be said, is spatial. Italian Veneto in the top 10 most visited regions of the EU Spain, France and Italy are the favorite destinations for European tourists, but only one Italian region – Veneto – falls in the “top ten” of the European Union, according to data published by Eurostats for the number of nights spent for tourism in 2015. In the ranking of the ten most popular destinations, the Canary Islands in Spain are clearly ahead with 94 million nights in 2015. Spain is the country with more regions in the ‘top ten’ with 75.5 million nights for Catalonia, 65.2 million for the Balearic Islands and 61.4 million for Andalusia. France has three regions among the ten most popular with Paris and Ile de France (76.8 million nights, second in the EU), Provence-Côte d’Azur (54.6 million) and Rhône-Alpes ( 48.7 million). Croatia ranks fourth in the EU (68.1 million nights), while Veneto is the only Italian region in the top ten, finishing in sixth place with 63.3 million nights. Six Italian regions in the Top 30 However, if you consider the 30 favorite destinations in the EU, Italy is tied with Spain and France with six regions in the ranking: Veneto, Tuscany, Lombardy, Emilia-Romagna, Lazio and the autonomous province of Bolzano. The southern regions are absent: according to Eurostat, in 2015, 58% of Europeans spent their holidays in their own country, 26% in another EU Member State. Only 16% of overnight stays were spent in non-EU destinations, with the United States being much more popular (13.8% of overnight stays by EU residents in the rest of the world), followed by Turkey (10%). 4%) and Morocco (4.6%).

Municipal taxes in Italy for 2018: Imu, Tasi, Tari

Imu, Tari and Tasi: tell me in which region you live and I will tell you how much they cost you Municipal taxes are important in Italy, although cheaper than property taxes and housing taxes in France. In particular, in Liguria. And the most important tax is Imu, with an average cost of 197 euros. However, the waste tax and the Tasi, communal tax on integrated services, are no less important. According to the data prepared by Adnkronos and contained in the tables distributed by the Ministry of Finance, during a parliamentary hearing on the fiscal capacity of local authorities for next year, in 2018, the Ligurians will pay on average 703 euros. Taxpayers who live in Calabria will pay less than half: 298 euros. In 2018, Italian taxpayers will pay an average of 489 euros of municipal taxes, but with significant differences depending on their place of residence. After the Ligurians, to pay the highest local taxes will be those who live in Lazio (596 euros) and in Tuscany (581 euros). Whereas, after Calabria, the least taxed will be the inhabitants of Basilicata (310 Euro) and Molise (354 Euros). Above the national average: Emilia Romagna (570 euros), Piedmont (500 euros), Lombardy (498 euros). Below the average: Veneto (479 euros), Umbria (464 euros), Abruzzo (451 euros), Marche (429 euros), Apulia (389 euros), Campania (377 euros). The cost of Imu Imu is the most important tax, with an average cost of 197 euros. The highest peak is in Liguria, where it reaches 362 euros, and the lowest in Basilicata, where it stops at 108 euros. Then there are Tuscany (236 euros), Emilia Romagna (234 euros), the action (232 euros), Piedmont (212 euros), Lombardy (200 euros), Veneto Abruzzo (€ 181), Marche (€ 170), Umbria (€ 168), Molise (€ 159), Apulia (€ 158), Campania (€ 131) and Calabria (€ 115). How much cost waste disposal (Tari) Waste costs an average of 122 euros. Tuscany (€ 161), Lazio (€ 154), Campania (€ 142), Emilia Romagna (€ 139), Abruzzo (€ 135), Umbria 136 euros)), Liguria (134 euros). Below the national average, Puglia (€ 119), Marche (€ 109), Piedmont (€ 105), Veneto (€ 102), Basilicata (€ 97), Calabria euros). The weight of Tasi The Tasi weighs on average 35 euros. There is Liguria (56 euros), then – above the national average – Emilia Romagna (43 euros), Tuscany (40 euros), Lombardy (39 euros), Lazio (39 euros), Piedmont (38 euros), Veneto (36 euros). You pay less than the national average in Umbria (31 euros), Abruzzo (31 euros), Marche (29 euros), Molise (28 euros), Apulia (25 euros), Campania Calabria.

The deep evolution of the Italian real estate market

  Housing is no longer a safe haven for the younger generations The brick no longer seems to be the safe investment property, especially for the younger generation. The purchase of the house no longer seems to be a priority, due to the economic conditions that have changed for the so-called millenials, generations roughly 25 to 40 years, poorer than previous generations. That’s mainly due to a change in lifestyle or because of the economic crisis that remains. The sharing economy , environmental sustainability, job insecurity have profoundly changed the issue. Now a home must be technologically advanced, safe, designed for energy efficiency and the use of natural materials, or otherwise promoting the health of its occupants. It is necessary to start designing the houses, taking into account the location and the correct orientation, the waterproofing of the building, but also the ventilation control, with renewable energy equipment and systems. “Today, you are asking for a connected, efficient, healthy home,” says Gaetano Courage, general manager of Paspartu, a company specializing in the restructuring of homes and buildings. “Our homes look more like a car, customizable, and re-examined over the years, to maintain performance. The imperative is to point towards urban regeneration “. Economic conditions for the construction of houses more unfavorable than in France The precariousness of work, the fact that there are fewer and fewer steady jons, also means that young couples rarely want to engage in a project to build a new house. The number of children per couple has also decreased significantly compared to the last century, which increases the demand for small-scale housing. Italy’s residential market is quite different from that of France for a rather simple reason: France counts 67 million inhabitants on a territory of about 513 000 km². Italy counts 63 million on a territory of approximately 310 000 km². Except that Italy is constituted by a good half of mountains, lakes, almost desert and uninhabitable areas. It can therefore be considered that its real population density is three times greater than that of France. Buildable land is more difficult to find, and, on average, much more expensive to buy. This is what guarantees a stability of the prices of the Italian real estate market, despite any economic crisis. It is a sort of floor, below which it really takes a major economic catastrophe in order for prices to go down. At present, I think that the Italian real estate market has hit the bottom, an opinion that seems to be corroborated by prices that have stabilized over the past few months and are even starting to rise slowly. Let’s combine that with a real estate stock that by more than 62% dates before 1990, and we will understand the importance of restructuring and restoring existing houses and apartments.

Tax deductions for the renovation of buildings

Tax deductions for the house The table summarizes the tax deductions – valid for 2017 – for the renovation of buildings, the purchase of furniture, energy savings and anti-seismic measures as foreseen on the basis of the budget law which has just been published in the Official Journal. Here are all tax deductions for the house valid in Italy for 2017, and probably far beyond CONSTRUCTION REDUCTION (Deduction of income tax) – For individual residential property units: extraordinary maintenance, preservation and restoration, renovation of buildings – For common areas of residential buildings: routine maintenance, extraordinary maintenance, preservation and restoration, renovation of buildings – The construction of garages or parking places, the elimination of architectural barriers, the sanitation of asbestos, works to prevent domestic accidents, measures to prevent illegal acts, etc., wiring of buildings. Maximum amount of expenditure for the calculation of the deduction – from 26.6.2012 to 31.12.2017 = 96,000 € – dall’1.1.2018 = 48,000 € The measurement of the deduction (gross tax) – from 26.6.2012 to 31.12.2017 = 50%, in ten annual installments – dall’1.1.2018 = 36%, in ten annual installments Accessories and Furniture and Major Appliances (Deduction of Income Tax) Purpose of the Fund – Purchase of furniture and “major household appliances” (eg refrigerators and dishwashers.) At least A + (A for ovens), for equipment for which the energy label is intended, finalized to the furnishing of the building under renovation. Maximum amount of expenditure for the calculation of the deduction (A) from 06.06.2013 to 31.12.2017 = EUR 10 000 (the costs covered by this measure are calculated for the enjoyment of the tax deduction, irrespective of the amount of expenditure incurred for renovation work benefiting from the deductions from income tax) (B) from 1.1.2016 to 31.12.2016 = EUR 16 000 of expenditure documented for the purchase of furniture and furniture for the main residence for young couples (forming a married or cohabiting fcouple as husband and wife, at least three years, in which one of the two did not exceed 35 years) purchasers of real estate units to use as their principal residence “. This benefit may not be combined with the measure referred to in paragraph (a). Measurement of the deduction (gross tax) – from 06.06.2013 to 31.12.2016 = 50%, in 10 annual installments – from 1.1.2016 until 31.12.2016 = (young couples for furniture purchase) 50%, in 10 annual installments – from 1.1.2017 until 31.12.2017 = 50% of the costs referred to in point (a) in 10 annual installments incurred in the year 2017 limited to the resumption of housing in the year 2016 or has started in 2016 and will continue in 2017 Measures for energy saving (Income tax deduction / IRES) Purpose of the Fund – Interventions aimed at the rehabilitation of buildings – from 1.1.2016 are also deductible expenses incurred for the purchase, installation and implementation of multimedia devices for the remote control of heating or hot water or air conditioning housing units,  and tools to increase awareness of energy consumption by users and to ensure efficient operation. Maximum amount of deduction – from 06.06.2013 to 31.12.2017 = interventions to reduce the energy requirements of existing buildings: 100,000 euros; Interventions on walls, windows (including frames) on existing buildings: 60,000 euros; Installation of solar panels: EUR 60 000; Replacement of winter heating systems: EUR 30 000 – from 1.1.2018 apply the rules and limits of interventions related to the renovation of buildings The measurement of the deduction (gross tax) – from 06.06.2013 to 31.12.2017 = 65%, in 10 annual installments – dall’1.1.2018 = 36%, in 10 annual installments Particularly important energy saving measures (Income Tax Deduction / IRES) Purpose of the Fund – energy-saving measures with respect to the common parts of condominiums under sections 1117 (condominium) and 1117-one (super condominium) of the Civil Code or affecting all the units that make up the individual condo Maximum amount of deduction – from 06/06/2013 to 31/12/2021 = interventions to reduce the energy requirements of existing buildings: 100,000 euros; Interventions on walls, windows (including frames) on existing buildings: 60,000 euros; Installation of solar panels: EUR 60 000; Replacement of winter heating systems: 30,000 – From 1.1.2022 apply the rules and limits of interventions related to the renovation of buildings The measurement of the deduction (gross tax) – from 06.06.2013 to 31.12.2016 = 65%, in 10 annual installments – dall’1.1.2017 = 36%, in 10 annual installments Claims assigned to suppliers For expenses incurred in the redevelopment of the common areas of condominiums, the persons who are in the “no tax zone” (retired, employed and self-employed), instead of the deduction Of the gross tax may be used to transfer the credit corresponding to the suppliers who carried out the work. PARTICULAR MEASURES TO SAVE ENERGY ON PARTS OF COMMON COMMODITIES (Income Tax Deduction / IRES) Purpose of the Fund (A) improving the energy efficiency of interventions in common areas of dwelling units that affect the building envelope with an incidence greater than 25% of the gross area of ​​the building of the same dispersant (B) improvement of energy efficiency measures for common areas of dwelling units designed to improve the winter of energy performance and in summer and with the least average quality referred to in D. Mr. Ministère du Développement économique 26.6.’15 Maximum amount of expenditure for the calculation of the deduction – Dall’1.1.2017 until 31/12/2021 = 40 000 € multiplied by the number of building units that make up the building – From 1.1.2022 apply the rules and limits of interventions related to the renovation of buildings The measurement of the deduction (gross tax) – From 1.1.2017 until 31/12/2021 = 70%, for the expenditure referred to in point (a), in 10 annual installments – From 1.1.2017 until 31/12/2021 = 75% of the expenditure referred to in point (b), in 10 annual installments – dall’1.1.2022 = 36%, in 10 annual installments Oath The existence of the conditions set out in (a) and (b) shall be subject to oath by qualified professionals through certification of the energy performance of

Rental income tax – a more favorable rate applies from 2016 on

In the STABILITY LAW 2016, a new Flat-Rate Tax Scheme favors landlords The flat-rate tax scheme, first introduced into the Italian tax system by Stability Law 2015, has been modified and made more practical and favourable in the 2016 Stability Law. The government’s aims for introducing the flat-rate tax scheme are to boost employment, steer Italy’s economic recovery in a positive direction, reduce undeclared taxable income and employment irregularities. The reformed tax scheme applies to individuals operating in what are classified as, ‘the arts and independent professional activities’ sector. This includes individuals generating income from the rental of investment properties and second homes. The reformed tax scheme: Establishes a tax replacing Irpef, Irap and additional taxes of 5% for the first 5 years and of 15% from the sixth year onwards: neither VAT nor other taxes are due.  Represents an opportunity to regularize compliance on any activity that has not previously been declared to the Italian Tax Authority. Foreign property owners may not realize that they need to declare this type of income, even if it is seasonal and infrequent. Owners may be subject to heavy penalties in case of an audit by the Italian tax authority. Taxable income in the flat rate – tax scheme is determined by applying profitability coefficients. These codes vary according to business activity. Accommodation, lodging, lettings and B&B activities are determined by applying a profitability coefficient of 40% of revenues. Let’s make an example: Mr. Smith owns a property in Puglia and decides to start running a (seasonal) business by renting out the property for holiday letting. Mr. Smith decides to apply for the flat rate-tax. Taxable income : Euro 16.000 (coefficient of profitability 40% of 40.000) Tax to pay: 800 (tax rate 5% of 16.000). With the ordinary tax scheme Mr. Smith would pay approximately Euro 4.300 on the same profit. And he would pay much more if eligeable costs to offset generate a higher profit. As an example, if the annual revenue are Euro 40.000 and the deductible cost are 15.000, the taxable profit will be Euro 25.000 and the taxation will be around Euro 6.500. As you can see from the example above, in the “5% tax scheme” for the purposes of calculating income tax, expenses are not included – the basis for the calculation of taxable income is exclusively based on revenue. Only social security contributions (INPS) can be deducted from revenues; it is worth a reminder here that any Italian resident taking advantage of the flat-rate scheme, must have social security cover. Social security contributions are calculated as a percentage of revenues, a reduction of up to 35% of contributions is available. Up to a profit of 14.000 euros the social security contribution is fixed at approximately Euro 1900. Looking at the example above – where the maximum profit is 16.000 – the social security/insurance contribution costs will be 1900 + 20% * 2000 = 2.700. These money will not be lost; after 5 years of contribution you will accrue a (small) pension. An Individual planning to start-up a business activity in Italy qualifies for the flat-tax scheme, provided that the individual has not (officially) carried out the same activity in the past three years and that revenues will not exceed €40.000 per annum. Foreign residents and non-residents, who generate an income from letting their property in Italy, wishing to benefit from the flat-tax scheme, must notify the Italian tax authorities through a Notice of Business Start-Up. If you need help to understand your personal situation, please contact me or seek advice from a qualified accountant registered with the ODCEC, the Italian professional accounting association of certified public accountants, auditors and advisors.