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POLITICS

EXPLAINED: What will Italy’s new budget mean for you in 2022?

The Italian parliament has approved the government's 2022 financial plan. Here's what people living in Italy need to know about the changes.

Italy's Budget Law for 2022 has been passed. Here's what that means.
Italy's Budget Law for 2022 has been passed. Here's what that means. Photo by MIGUEL MEDINA / AFP

Italy’s government has now made its budget plan for next year into law, laying out upcoming tax and pension reforms as well as clarifying some extensions to tax breaks for home renovations.

The 2022 Budget Law, the first presented by the Draghi government, was approved on Thursday, just one day before the end-of-year deadline, following approval from the Senate last week.

The package of measures targets funds at managing the continuing Covid-19 health emergency, while billions have been assigned to help tackle high household bills and authorities also earmarked relief for areas hit by last summer’s wildfire damage.

Here’s a look at the confirmed measures most likely to affect you.

Income tax

As previously agreed, Italy has formally approved a drop to its income tax bands from five to four and reduce tax rates for those on lower incomes.

Italy’s personal income tax, or ‘IRPEF’, on earnings between up to €15,000 will remain at 23 percent, while for salaries of between €15,000 and €28,0000, taxes will be reduced from 27 percent to 25 percent.

For salaries between €28,0000 and €50,000, the applicable tax rate will be 35 percent.

The 41 percent tax band for earnings between €55,000 and €75,000 will be abolished altogether, with all income over €50,000 now set to be taxed at the top rate of 43 percent.

The so-called ‘Bonus Renzi’, introduced by former Italian prime minister Matteo Renzi in 2014, which initially awarded an 80 euro and later a 100 euro tax bonus to lower earners (up to €15,000), will remain despite previous plans to scrap it.

Photo by Christian Dubovan on Unsplash

Additionally, for employees with low incomes up to  €35,000 per year (or up to €2,692 gross per month) the government will offer a 0.8 percent discount on social security contributions (‘INPS’) for the pay periods from January 1st to December 31st 2022.

Further funds have been set aside to eliminate the regional production ‘IRAP’ tax on sole proprietors and the self-employed. This will affect some 835,000 self-employed and professionals with a VAT registration number and will have an estimated cost of just over €1 billion in 2022 and €1.2 billion from 2023.

READ ALSO: How new freelancers in Italy can slash their tax bills to as little as 5%

Additional taxes

The regional and municipal additional taxes on personal income tax (‘Irpef’) will be postponed to March. The deadline was previously set for December 31st 2021 and this change will allow regional and autonomous provincial legislation to be brought into line with the changes to personal income tax as set out in the Budget Law.

Pensions

Following the government’s plans to expand who can access pensions, the approved Budget has widened the range of people to include women and those in certain types of tough manual jobs who benefit from early pensions, the so-called ‘APE sociale (Anticipo Pensionistico)‘.

It was originally an experimental measure introduced in May 2017 and has been rolled on since then.

This category of workers will be able to retire early through the APE Sociale, with the threshold of contributions dropping from 36 to 32 years. The age requirement to access pensions remains 63.

More jobs have been added to the list too, including primary and pre-primary school teachers, warehouse workers, qualified professions in health and social services and some plant and machinery operators.

Authorities also approved the so-called ‘Quota 102’, which will replace the previous ‘Quota 100’. This means an early retirement pension for individuals who, during the course of 2022, reach the requirements of 64 years of age and 38 years of contribution years.

Photo by Ina FASSBENDER / AFP

Household energy bills

A cut to the cost of electricity and gas bills is coming in 2022 – parliament approved an amendment to the budget that doubles the resources earmarked for reducing energy prices.

€1.8 billion will be made available to contain the effects of price hikes in the electricity and natural gas sectors. The additional funds will be added to the €2 billion previously earmarked for in the budget package, bringing the total budget for this area to €3.8 billion.

READ ALSO: Rising energy prices: How to save money on your bills in Italy

Families in difficulty can also be pay their household bills in 10 instalments.

The law aims to “contain, for the first quarter of 2022, the effects on households and businesses resulting from gas price increases that have reached unprecedented levels and led to significant increases in electricity prices”, the technical report reads.

Building superbonus

After much speculation as to how this building bonus would continue into 2022, the superbonus on single-family homes has been approved for the whole of 2022.

The previous caveat has been scrapped. Now there’s no reference to only being eligible if it’s your first home and if you have an ISEE (the social-economic indicator of household wealth) of €25,000 maximum.

Now, the only requirement is that 30 percent of works must be completed by June 30th 2022.

Italy’s government launched the ‘superbonus 110‘ in May 2020, one of a raft of measures aimed at boosting the Covid-hit economy. Offering homeowners large tax deductions on expenses related to energy upgrades and reducing seismic risk, the scheme has been so popular that high demand has led to delays on many projects.

READ ALSO:

Condominiums, owners of buildings consisting of two to four units and third sector organisations will be able to take advantage of the benefit until 2025, with a sliding scale: 110 percent remains valid until 31 December 2023, dropping to 70 percent in 2024 and 65 percent in 2025.

Other building and home bonuses

More of Italy’s numerous tax ‘bonuses’ have also been extended and, in some cases, increased. Authorities have given the green light to raise the ceiling of deductible expenses for the furniture bonus, for example, from €5,000 to €10,000.

This bonus permits a 50 percent deduction on purchases of furniture and large household appliances such as ovens (not lower than class A), washing machines, washer-dryers and dishwashers not lower than class E and refrigerators and freezers not lower than class F.

Photo by Tiziana FABI / AFP

The TV and decoder bonus has also been re-financed with an additional €68 million euros for 2022. The measure is intended to help with the costs of replacing older sets when Italy switches its signal to DVB-T2 in June 2022.

The contribution will be used to finance ”the purchase of TV sets suitable for the transmission standards in force and decoders”, reads the technical report. Those over 70 with an annual pension of under €20,000 will also be entitled to home delivery of a TV and decoder.

Also confirmed until 2024 are the renovation bonus, ecobonus, sismabonus, the water bonus and the facade bonus – but this one will only be rolled on into 2022 at 60 percent and no longer at 90 percent.

Single universal child benefit

From January 1st, families can submit applications for the single universal child benefit, available from March 1st 2022.

The single allowance is applicable to all categories of employees both public and private, self-employed, pensioners and the unemployed.

Almost all baby bonuses will disappear from March, with the exception of the nursery bonus.

Help to buy a first house for those under 36

Tax incentives for purchasing a first home for people under 36 years of age, known as the first home bonus (Bonus prima casa), have been extended through 2022.

The scheme aims to eliminate VAT on taxes relating to deeds transfers and the mortgage on the purchase of a home, and help young homebuyers secure a mortgage.

For more details on the scheme and how to access it, see here.

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PROPERTY

Revealed: The most expensive places in Italy to buy a house in 2022

Many factors are at play when deciding where to purchase a home in Italy. To help you decide, here are the most expensive and sought-after locations in Italy, according to the latest data.

Revealed: The most expensive places in Italy to buy a house in 2022

Searching for the right property in Italy involves a balancing act of location, price, convenience and how much, if any, restoration work needs to be done.

Budget usually tops the list for house-hunters, narrowing down the number of potentials for making your move to or within Italy.

If the entire country is your blank slate, here are the areas in Italy that rank as the most expensive – and desired – according to data from property portal Idealista for the first quarter of 2022.

The report ranks the top 100 municipalities according to popularity, based on those listings generating the most leads (email contacts and shares) and those where the average final sale price is highest.

READ ALSO: How bargain homes made one Italian town €100 million in two years

Taking the top spot for the most expensive place to buy in Italy is Pietrasanta in Versilia, in the province of Lucca, which the researchers also state holds first place in the top 100 most expensive places to rent a house too.

This area includes the playground of the rich, Forte dei Marmi, where the average selling price of a house is over half a million euros (€541,351).

The table below shows the full ranking.

In second place is Alassio, in the province of Savona, where homebuyers will on average shell out €467,019 for a residential property (again, valid for the first quarter of 2022).

Venice comes in at third place, where the average asking price is €433,640.

READ ALSO: EXPLAINED: The hidden costs of buying a home in Italy

In the top 10 spots, the report noted that the most expensive properties are in tourist resorts, possibly driven by those wanting second homes in popular locations.

Such locations include Lerici, Riccione, Desenzano del Garda, Camaiore and Cervia, while the cities of Florence and Milan, where average sale prices exceed €350,000, have also made the top 10.

The study revealed that the final average price of a house for sale in Rome is €273,341.

Researchers also looked at popularity of locations, based on pressure of demand on supply across Italy.

Bologna topped the charts, making it the city with the highest number of contacts per advert (4.7) of houses for sale published on idealista. Cagliari followed in second with 3.8 contacts per advert and Milan (3.4 contacts per advert). Trieste, Naples, Rome, Salerno, Brescia, Verona and Lecce also made the top 10.

READ ALSO: 15 insider tips to make living in Bologna even better

Here’s a selection of the most popular places to buy in Italy based on the report data, narrowed down to the top 20.

See more in The Local’s Italian property section.

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