Italy Home Europe Italy Living There Taxes on Residents' Income from Property in Italy More IT × Italy Financial Overview Overview House Prices Market in Depth Rental Yields Income Tax et al Tax Example Taxes if Resident Buying Guide Landlord and Tenant Property Inheritance Country Statistics Property Investments Where to Buy Survey of Italy Milan Rome Sardinia Sicilia Tuscany Key Contacts Accountants Lawyers Real Estate Agents Mortgages Income tax in Italy June 22, 2017 INDIVIDUAL TAXATION Residents in Italy are taxed on their worldwide income. Married couples may be taxed separately depending on the conditions set on the marriage contract. An individual is resident in Italy if he is registered in the Civil Registry or has established his principal centre of business or has his habitual abode in Italy. INCOME TAX Income is classified according to the following categories: (1) income from immovable property, (2) income from capital, (3) income from employment, (4) professional income, (5) business income, and (6) miscellaneous income, including capital gains. Income is taxed at progressive rates. Taxable income is generally an aggregate of all kinds of income, less income generating expenses and allowed deductions and allowances. INCOME TAX TAXABLE INCOME, € TAX RATE Up to €15,000 23% €15,001 - €28,000 27% on band over €15,000 €28,001 - €55,000 38% on band over €28,000 €55,001 - €75,000 41% on band over €55,000 Over €75,000 43% on all income over €75,000 Source: Global Property Guide Residents in Italy may avail of tax credits and deductions. Among them are tax credits for family circumstances, which can be deducted from the tax due, rather than the taxable income. The amounts of the deductions, however, are based on the amount of income earned and are computed using certain formulas. RENTAL INCOME Taxable rental income is generally computed as rental income less a lump-sum deduction of 30% for repair and maintenance expenses. Taxable rental income cannot be less than 70% of the gross income. The normal income tax rates are then applied to the computed taxable rental income. Individuals may be taxed at a flat rate of 21% on their income from leasing property in Italy. The property owner must register and comply with local tax rules, in order to qualify for this scheme. CAPITAL GAINS Gains from the sale of real estate property are not taxable if the property was held for more than five years. If the property was held for less than five years, the gains are taxed as income. Taxable capital gains are computed as selling price less acquisition costs and related expenses. Gains from the sale of a primary residence are not taxable. PROPERTY TAX Local Property Tax (imposta municipal unica, IMU) Local property tax is levied on Italian properties and are payable by the property owners. The tax is levied on the estimated or cadastral value of a property, which is increased by 5%. The resulting value is then multiplied by a number of coefficients based on the property type. The coefficient for apartments and residential buildings is 106. Then the local property tax rate is levied on the tax base, and the applicable tax rate ranges from 0.40% to 0.76%, depending on the property location. The tax rate in Florence is 0.40%. CORPORATE TAXATION INCOME TAX Corporate income and capital gains are taxable in Italy at the corporate income tax rate of 27.50%. Operating costs and income-generating expenses are deductible when computing the taxable income. Italy - More data and information Lawyers (attorneys) with property law practices in Italy Where to by property in Italy Comments Be the first to comment on this article! Login or Register to submit a comment! In order to promote open and spam-free conversations, Global Property Guide moderates commetns on all articles. You can expect that your comment will be published within 24 hours.