To complete the picture of our interventions in the field of property taxation in Italy, now we deal with the taxation of leases, in particular when the landlord is a foreign entity or, anyway, a subject non-resident in Italy.
As a general principle, also valid in other states, when a person rents a property in the territory of a state, the person in question, although resident in another country, need to pay taxes to the state in which the income from the location is produced.
So even non-Italian citizens resident in another state, who have done an investment property in Italy and rent the property who bought, have to pay taxes to the Italian state, rather than the state in which they reside.
Given, therefore, that, with regard to the renting of buildings in the Italian territory, the treatment of non-residents is equal to that of residents, let’s see now what is or what are the taxes you have to pay for the rent of the lease.
In this regard, there is a very significant innovation introduced by the Italian Government in 2011 : the person who rents his property for residential purposes shall be entitled to benefit from a preferential tax regime, known as “ cedolare secca ”: it is a choice that replaces the ordinary tax regime and that, as we have said, also applies to foreign citizens, whether they belong to the European Union, whether they belong to non-EU states ( such as Russia).
Thanks to the system of “ cedolare secca ” the foreign investor knows exactly in advance what will be the tax which must be paid to the Italian state for the rental of his property. In fact, the tax payable on the rent received is unique and equal to 21% of the rent paid by the tenant, and this is just what is called “ cedolare secca ”.The tax in question applies to leases of residential properties belonging to the cadastral categories from A1 to A11, which include all types of housing, including villas and castles.
About the type of contracts, this tax regime applies to all types of leases for residential purposes, ie contracts in fee-free, such as contracts drafted on templates ( on the basis of agreements between the organizations of landlords and tenants ) and any temporal duration they are.
This means that this regime also applies to the so-called mini-locations, ie the rentals of less than thirty days, such as vacation rentals, and rentals of one only room.
We are always dealing with foreign citizens who do not have their main residence in Italy.
It’s well known that Italy is one of the favorite holiday destinations of foreigners, who will often buy a house to spend their holidays ( think of the families of German, Swiss or Russian who buy homes in Tuscany ….).
Because these people do not use all the year their secondary residence in Italy, very often rent their homes to others during periods outside of their holidays. Just for these people the regime of ” cedolare secca ” is extremely understandable : they know that, if they want to lease their house, villa etc.. , they must pay to the Italian state only a single tax on the rent paid them by their tenant.
This tax, with an only not progressive rate, in fact also replaces all other taxes, namely the personl tax ( IRPEF ), the stamp tax ( imposta di bollo ) and the register tax ( imposta di registro ).
Even the mode of application and payment of ” cedolare secca ” are extremely simple : the landlord, who wants to benefit from this simplified taxation system, must communicate this to his tenant with a record delivery letter in the moment of registration of the contract at the Tax Office.
Finally, with regard to the payment of tax, the same must be done in a single installment by 30/Novembre, if the amount is less than € 257,52, and in two installments, one of which is the 6/Luglio (40%) and the other by 30/Novembre (the remaining 60%), if the amount to be paid exceeds € 257,52.