The dry tax rate rises to 26% of a second rental home, which is the new rate on rental income due from 1 January 2024.

The new flat rate tax will apply at an increased rate of 26% only starting from the second rented home. However, nothing changed for the first or only rented home, with the rate remaining at 21%. This is clarified by a new circular issued by the Revenue Agency, which implements the procedures of the latest Budget Law. A landlord who rents out multiple homes will be able to choose one for each tax period to take advantage of the preferential rate of 21%. The choice must be indicated in the tax return for the tax period in question. The new rate of 26% applies to rental income due from 1 January 2024, regardless of the date the relevant contracts were signed and the fees were received.

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Brokers

New rules also for real estate brokers and managers of electronic rental portals who, when paying the owner, will always have to act, as tax withholding agents, withholding tax of 21% as an advance payment regardless of the tax regime adopted by the beneficiary.
The agency also sets rules for non-resident brokers. Individuals residing in a different EU country who do not have a permanent establishment in Italy can fulfill the obligations directly or appoint a tax representative in Italy. Non-EU entities that have a permanent establishment in one of the EU Member States fulfill their obligations through the permanent establishment and, in the absence of this, must appoint a tax representative.

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VAT numbers

As the Court of Cassation explained, the dry tax can also be applied when the tenant is a company, VAT number or company that rents a house to its employees, customers or suppliers. The requirement to let property outside the carrying on of business, arts or professions relates exclusively to the lessor, contrary to what the Revenue Agency has supported in the past 13 years. The ruling, which was filed on May 7, holds that “tenant quality and rent traceability, in the case of residential use, are irrelevant to the tenant’s professional activity.”