Tax Italy

[Francis1890]

Hi,

My wife and me own a holiday house in Italy, that we rent through Airbnb since several years. We are no italian residents, and declare the rental income from the start. It's a flat rate tax, where we pay an advance for the current year (2x a year) and balance the year after.

Since this year, Airbnb withholds taxes from the source . I notified my accountant, but according to her there is an issue : the house is on both names so until now tax declaration and calculation is for my wife and myself each 50%. However, on Airbnb tax can only be handled on 1 person.... which means that I am overpaying taxes and my wife will continue to be taxed on the 50%.. Maybe the balance calculation will regulate, but as it is our only income in Italy I have doubts that it will be restituted correctly (and it will be only next year at the soonest)

The proposal of our accountant is that I make a contract between my wife and myself that I can earn all income from the house. Contract that has to be registered... min. 500 Eur costs. 

Is anyone in the same situation and any tips how to solve this ?  

[Jarl19]

Hi @Francis1890,

It sounds a little complicated. We are  soon in the same  situation and I was hoping to avoid the same issue. We are just about to buy a house in the Como area that needs a lot of tender love and care. At the end of the day  (two years...) we also plant to rent it out through airbnb to get some passive income when we are not there. 

The plan is to complete the purchase in approximately two weeks time. I am now wondering if we should own it jointly or simply have one of us as an owner. Based on what you write above, single ownership seems to make more sense.

In addition, we may buy a second property down the line. My idea is then that the other party becomes the owner. There are then several tax questions.

1. There is a purchase tax on the fiscal value at 2%. This will apply to our first house  purchase. If my wife buys the first house in her name and I buy the second house in my name, will I then also pay the 2% fiscal tax or will I have to pay the 9%? Does anyone know if this is judged by individual  or jointly as we are  married (not living in Italy) and we both have  the Italian Codice Fiscale.

2. Airbnb can/will withhold 21% of the rental income if I/we are non professional host. Will this rate change if I/we own more than property (but less than five)?

3. The day we sell the property, does it matter how many we own when we sell? My understanding here is that the profit tax on gains per property is a flat 22%. Is this a correct understanding?

If there is anyone here with some insights, I would truly appreciate it. 

Thanks

Jarl

[Angela1056]

Hello @Jarl19 , as for my knowledge 

1. The purchase tax of the house purchase is judged individually.

2. If you individually do tourist rentals your 2nd/3rd/4th rental will change to 26%. Different rules about private rentals/hosting applies and in some Region you have to declare professional hosting if you rent out more than  3 properties for tourist purposes.

3. I don’t know.

[Jarl19]

@Angela10 thanks for your input. We will simply see down the line. Firat have renovate the first one! 
cheers

Jarl

[Alexandra2147]

Hi. I hope you are well.

Would you mind sharing your accountants details? I am trying to find an accountant who can help with the all the tax and legal aspects of my new purchased property which I would like to rent out while I am not in Italy. 

[Paula]

Hello @Francis1890, it's great to see you participating in our community.

I would like to reach out to two of our most experienced Hosts in Italy to see if they can shed some light on this topic: @Angela1056 and @Andrea6232.

Regards 🌟

[Angela1056]

Hello @Francis1890 , your accountant is correct. I wouldn’t worry too much about tax refunds, in this case anything paid more gets returned usually the following year.

As for the contract between you and your wife (comodato d’uso for you?) you should take into consideration that in this case the flat tax of 21% (cedolare secca) only applies if you are registered for short term rental (not more than 29 nights/person/year). 

It is also important that all the registrations (communication to the municipality, registration at the Region on ROSS1000 and Alloggiatiweb, register for the tourist tax etc) are made in your name and you declared to be the tax payer in the financial information on Airbnb.

Please take into account that I’m not an accountant, these are my personal experiences and knowledge as host and tax payer on Airbnb. 

[Francis1890]

Thanks Angela

[Paula]

Hello @Francis1890, It's wonderful to see that you have received responses from our experienced Hosts. Thank you so much, @Angela1056 and @Andrea6232, for your valuable advice 😊🙏

Francis, if you find any of their answers particularly useful, please don't hesitate to mark it as the best answer. You can do this by clicking the button below the comment, as shown in the following image:

This will help future Hosts with similar questions easily find this conversation.

All the best.

[Andrea6232]

Ciao @Francis1890 , I am not an accountant myself but I agree completely with @Angela1056 : I think the best way to proceed should be through a "comodato d'uso" 😉

Andrea

[Francis1890]

Thank you Andrea

[Francis1890]

Another episode in the Tax saga.. It is getting even more complex !

As mentioned, Airbnb withholds the taxes that are directly paid to the Italian government. As I am a Belgian citizen, this should be OK  as there is an agreement between Belgium and Italy to avoid double taxes. Now, the Belgian governance is reviewing this income, and considers 40% of the rent as 'movable income' - renting of the furniture, which is not part of the international treaty according to them. 

Meaning that I will pay double taxes on 40% of the income I have from Airbnb 😞

Anyone with similar experiences ? 

[Marco1311]

Hello @Francis1890 ,

I have just received a letter from the belgian tax authority with the exact same request which I find a bit weird.

i have asked for help to my Belgian/Italian local (Belgium)  tax accountant but I have no news yet. 
it would be weird in my opinion because it would make the agreement partially not working because the revenues in IT with an Airbnb materialize only when the apartment is furnished (nobody would rent an empty one for short stays).

The BE letter also says that it is up to me to demonstrate that IT and BE have the double tax convention and that I have the rights to benefit from it, so maybe it is just a matter to provide such a clear justification.

[Francis1890]

Hi @Marco1311 ,

Seems we’re both Belgian and tax authorities are chasing us for extra money 😉

In the meantime :

- I opposed the review of my taxes, referring to the double tax agreement between Italy and Belgium 

- Belgium tax authorities didn’t agree as according to them, the agreement does not include ‘roerende inkomsten’…(as furniture etc would be). They revised my taxes of the last 2 years 

- I spoke to my Italian account, who referred to art 6 of the convention which includes furniture etc in the definition of ‘immovable property’ , according to her it is all subject to Italian taxes

- so I opposed the revision of Belgian tax authorities, with all the details of my Italian tax declarations and referring to the art 6… waiting for the answer 

let’s keep in touch how this turns out.

and to be honest, for the money that we pay to Airbnb, I consider their support on this very poor.. it just costed me 500 euros to register a contract between my wife and I to regulate Italian tax, as they ‘forgot’ that on a property, there can be 2 owners on which income has to be declared…