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How Airbnb’s tax rules in Italy are changing in 2024

Airbnb has said it will start automatically withholding a 21-percent tax from some hosts’ earnings in January – but who exactly does this apply to and what can you expect?

Published: 11 January 2024 13:20 CET
Updated: 13 January 2024 08:33 CET
Airbnb, Italy
A view of Burano, a small island in the Venice lagoon, in September 2023. Photo by GABRIEL BOUYS / AFP

A major change is set to affect homeowners renting out their properties for short periods of time this year as rental platform Airbnb has said it will automatically withhold a 21-percent tax from hosts’ earnings from January. 

The announcement followed a long legal dispute between Airbnb and Italy’s tax agency (Agenzia delle Entrate) over a law requiring short-term rental platforms to act as “tax agents” and therefore withhold host income tax on behalf of the Italian tax office.

Though the requirement was made into law in April 2017, Airbnb did not collect rental income tax from hosts over the following six years as it argued in a EU court that the obligation was not legal under the bloc’s regulations – a case ultimately lost by the site in December 2022.

READ ALSO: Airbnb to pay €576-million settlement in Italian tax evasion dispute

As Airbnb is reportedly in the process of notifying homeowners of the upcoming change and asking them to update their tax preferences when needed, a certain degree of confusion lingers over what this latest development is all about and exactly which types of hosts will be affected by it.

What’s really changing?

Not unlike any other type of income, income from Airbnb lets must be declared to the Italian tax agency and is subject to income tax on a yearly basis.

Bernalda, Basilicata

A view of a street in Bernalda, in the Basilicata region, in August 2011. Photo by GIUSEPPE CACACE / AFP

Owners offering short-term accommodation (this is defined as any rental period of 30 days or less in Italy) have two options when it comes to paying income tax on their earnings:

  • Regime ordinario (or ‘ordinary tax regime’), which entails declaring any rental income as part of your overall income for the year and then paying Irpef (Italy’s main tax on individual income) on it.
  • Cedolare secca: a 21-percent flat tax on rental income, which increases to 26 percent for owners renting out two to four houses, and is not available for owners letting five or more properties.

Previously, owners would choose one of the two options above when filing their yearly taxes and then make payments based on their individual declarations.

The incoming change however means that Airbnb will automatically withhold a 21-percent income tax from hosts’ earnings, with owners required to choose at tax time whether to claim the ‘withheld amount’ as their cedolare secca payment for the year or subtract it from their planned Irpef payments if they choose the regime ordinario.

Who does this apply to?

Airbnb says the change will apply to “the earnings of non-professional hosts derived from short lets”. 

But while Italian law is clear as to which rentals qualify as short lets – that’s any rental period of 30 days or less – it doesn’t define exactly who’s a professional host and who isn’t, with the Agenzia delle Entrate vaguely describing professional hosts as owners carrying out “organised business activity” under “income and VAT considerations”. 

Florence

A view of Pitti square in Florence. Photo by CLAUDIO GIOVANNINI / AFP

Airbnb guidance offers some degree of clarity on the subject, as the site says that a non-professional host is a “private citizen” for whom renting via Airbnb is “a secondary activity”, meaning that it’s not their “main job or source of income”.

For instance, this includes “hosts that rent fewer than five properties and are not partita Iva owners”.

READ ALSO: How Italy is planning to limit Airbnb rentals

On the other hand, businesses and private citizens who either rent properties via Airbnb as their main job or source of income or “are part of a consolidated business” should be considered professional hosts. 

If you have doubts on whether or not your activity on Airbnb qualifies as professional, you’re advised to get in touch with a legal expert.

When do the changes come into effect?

Airbnb has said that it will reach out to non-professional hosts in January to notify them of the change. 

Hosts will have fourteen days from when they were first notified to either confirm that they should be subject to the automatic 21-percent withholding as ‘non-professional hosts’ or communicate that their host status has changed to ‘professional’. 

READ ALSO: What to expect from Italy’s property market in 2024

If you confirm your non-professional status, the 21-percent withholding will apply from the moment you submit your reply.

If you don’t reply to the message within the fourteen-day window, the tax will be applied automatically following the deadline.

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PROPERTY

Can you still buy Italy’s one-euro homes in 2024?

A lot has changed since Italy's 'one-euro' home offers first made international headlines, so are they still available - or worth considering?

Published: 14 May 2024 10:27 CEST
Can you still buy Italy’s one-euro homes in 2024?

The prospect of buying a house in Italy for less than the price of a caffè normale at the local bar caused a sensation back in 2019, when news of one-euro home schemes hit the international headlines.

There was a property stampede in Sicilian towns in particular, with local mayors reporting being overwhelmed with enquiries in English and other languages.

MAP: Where in Italy can you buy homes for one euro?

Even sceptics couldn’t contain their curiosity: Was it a joke? What condition were these houses in? And how much was this really going to cost?

Several years later, we know that these schemes are legitimate attempts to breathe new life into depopulated areas and unburden local authorities of old, unwanted properties that would otherwise be left to fall apart. And in some cases, at least, it has worked – and proved very lucrative for the towns involved.

We know most of these houses are in a very poor state of repair, requiring major investments from their new owners. And we know the costs can be high, with reports of some international buyers spending hundreds of thousands of euros on renovations – many times more than the property’s potential market value.

READ ALSO: Six things to know about Italy’s one-euro homes

But we’ve also heard from some readers who tell us that, while these homes do of course cost more than one euro, for a sensible buyer they can be a worthwhile investment.

Not only are Italy’s one-euro home offers still going strong in 2024, but new towns are joining the scheme, while others continue to announce similar ‘cheap home’ projects such as the rental programme in Ollolai, Sardinia aimed at remote workers – one scheme that’s expected to take off following the introduction of Italy’s new digital nomad visa in 2024.

So what do you need to know if you’re curious about these Italian property bargains?

As ever, if you’re interested in buying a one-euro home you’ll need to meet certain requirements which vary depending on the local authority. After all, this is not a nationwide scheme but a series of small initiatives run by local councils in each town or village, so you’ll need to carefully check the terms and conditions of every offer you consider.

Generally though, the following will apply:

  • Foreign nationals can buy one-euro houses, whether they’re EU or non-EU citizens – but remember owning one will not give you any residency rights in Italy, and visa rules will still apply to non-EU nationals.
  • The prospective buyer can’t just make vague promises about doing the place up: you’ll need to present a renovation plan within 2, 3 or 6 months depending on the village.
  • Buying a one-euro home to turn into a tourist rental business is generally allowed, but you’ll need to let the local authority know your plans when you apply.
  • The cost of the house, all renovation costs, and all notary, legal, transfer and other fees are the responsibility of the buyer.

Some things have however changed in the past few years which make buying and renovating a one-euro home less affordable than it once was.

Many buyers in recent years were further tempted by generous state subsidies available to cover the cost of renovation work – most famously the ‘superbonus 110’ which covered up to 110 per cent of qualifying expenditures.

READ ALSO: What taxes do you need to pay if you own a second home in Italy?

Though the superbonus is now winding down and is no longer open to new applications, it has had a knock-on effect which means renovations in Italy generally take longer and cost more than they used to.

The superbonus scheme’s enormous popularity led to an ongoing shortage of building contractors in Italy, who were booked up months, or even years, in advance.

And as the popularity of these offers has exploded, the most viable properties in some areas now often become the subject of a bidding war, with the sale price rising from one euro to tens of thousands.

Find a map of the towns currently offering one-euro homes in Italy here.

Have you bought a property through a one-euro home scheme in Italy? We’d love to hear from you. Please get in touch by email or in the comments section below to let us know about your experience.

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