Circular No. 10 of May 10, 2024, issued by the Italian Revenue Agency, provides significant clarifications on the new regulations introduced by the 2024 budget law regarding short-term rentals.
In this article, we will analyze in detail the main provisions contained in the circular, with a particular focus on the increase in the flat-rate tax, the obligations of intermediaries, and the penalties for violations. 📚🔍
Increase in the Flat-Rate Tax Rate 📈
Effective from January 1, 2024, the substitute tax rate on income derived from short-term rental contracts has been increased to 26%.
However, the legislator has provided the possibility for the lessor to benefit from a reduced rate of 21% for income derived from short-term rental contracts related to one property unit per tax period, at the lessor's choice.
Application of the New Tax Rate 📅
The circular clarifies that the new 26% rate applies to rental income earned from January 1, 2024, regardless of:
Date of conclusion of the short-term rental contracts 📝
Time of receipt of rental payments 💰
Therefore, even for contracts concluded before January 1, 2024, the 26% rate will apply to income earned from that date onwards.
Choice of Reduced Rate 🏠
The lessor has the option to choose the property unit for which the 21% reduced rate will apply in the income tax return for the relevant tax period.
This choice can be made annually, allowing the lessor to change the property unit benefiting from the reduced rate according to their needs.
Obligations of Intermediaries 🏢
The circular extensively covers the obligations imposed on intermediaries, including online platform operators, who collect or facilitate the payment of rental fees related to short-term rental contracts.
In particular, intermediaries must:
Always withhold 21% as an advance tax on the amount of short-term rental fees 💸
Apply the withholding at the time of payment to the beneficiary, regardless of the contract's conclusion date or income accrual 📅
Apply the withholding irrespective of the tax regime chosen by the beneficiary (flat-rate or ordinary regime) 🔍
The lessor will then need to determine the due tax (ordinary or substitute), deduct the advance withholdings, and pay any balance by the income tax payment deadline.
Obligations for Non-Resident Intermediaries 🌍
The circular provides specific instructions for non-resident intermediaries, who must comply with the EU law as interpreted by the Court of Justice of the European Union. Specifically, the 2024 budget law has adjusted national legislation to align with the Court's ruling on the tax obligations of non-resident intermediaries issued on December 22, 2022.
Penalties 🚨
Circular No. 10/E also mentions the penalties for violations of the short-term rental regulations:
Failure to provide, incomplete, or inaccurate communication of short-term rental contract data results in a penalty ranging from 250 to 2,000 euros 💸
Failure to withhold or inaccurate withholding by intermediaries incurs a penalty as per Article 14 of Legislative Decree No. 471/1997 🚨
Additionally, when activities are conducted entrepreneurially, penalties apply for both non-compliance with safety requirements as prescribed by national and regional laws and failure to submit the SCIA.
Safety and Installation Requirements 🔒
The circular emphasizes the importance of complying with safety and installation requirements for short-term rentals:
Lack of gas detection devices or fire extinguishers is punishable by a fine ranging from 600 to 6,000 euros for each verified violation 🚒
Ensuring installations conform to current safety regulations is essential 🔌
Summary Table 📊
Aspect | Details |
Standard flat-rate tax rate | 26% (from January 1, 2024) |
Reduced flat-rate tax rate | 21% (for one selected property unit) |
Application of new rate | Income earned from January 1, 2024 |
Withholding by intermediaries | 21% as an advance tax |
Time of withholding | At the time of payment to the beneficiary |
Non-resident intermediaries' obligations | Compliant with EU law |
Penalties for failure/inaccurate communication | From 250 to 2,000 euros |
Penalties for failure/inaccurate withholding | Article 14 of Legislative Decree No. 471/1997 |
Penalties for safety non-compliance | From 600 to 6,000 euros per violation |