Generally, short-term rental income in Italy are subjected to rental tax, income tax, or VAT. Short-term rental tax in Italy varies depending on the type of tax regime that a host falls under. There are two different tax regimes which are; the ordinary national tax scheme popularly known as IRPEF and the Cedolare Secca also known as the dry coupon.

IRPEF is calculated as the sum of the annual revenues, meaning that income from short-term rentals will be added to other income realized from work, personal income tax, and property tax and capital gains for the year and filed through a tax return called “Modello Unico” at the rate of 23% to 43% can be applied, although it allows for deductions such as property renovation costs or Airbnb fees.

IRPEF is usually paid mid year of the tax year based on what was paid the year prior. Therefore, taxpayers must pay a portion of the current year’s taxes before having necessarily actually earned that amount. The following year when taxes are due, hosts declare the exact amount earned the previous year and pay any difference or get a refund. Therefore, there are different due dates for the current year’s taxes and the past year’s taxes therefore it is advisable to fill out the Modello Unico by the first deadline of 16 June so you can calculate what you owe. Then you can pay on time and immediately mail in the Modello Unico well in advance of its 31 July deadline. There is a penalty of 0.40% for late filing of tax. Check with your local revenue office to know the actual dates for filing and remitting the taxes for the current tax year.

The second tax regime Cedolare Secca, is only available to non-professional hosts. Its preferential fixed rate of 21% applies exclusively to income generated from the short-term rental and it does not allow for the deduction of any expenses.

NOTE: Personal income tax is calculated using the IRPEF tax regime and the current VAT rate in Italy is 22%.mid-year