Controversy Surrounds Proposed Increase in Short-Term Rental Tax in Italy

This week, the Italian media has been abuzz with discussions about the proposed short-term rental tax, which applies to owners renting out apartments to tourists through online platforms such as Airbnb. The government aims to increase the tax rate from 21% to 26%, a move which has met with staunch opposition from political parties Forza Italia and Lega, both of which are prepared to challenge the proposal during the upcoming budget law discussions. The internal conflict within the government has led to a series of contradictory proposals in a very short timeframe, causing significant confusion among stakeholders. It is important to clarify that this tax is technically a levy; while taxes are paid to the State in exchange for specific services, levies contribute to broader public services such as healthcare and education. For many years, the government has permitted landlords to pay this levy through a flat-rate scheme, which allows them to pay a fixed percentage of their rental income. This simplification aims to reduce administrative burdens and discourage tax evasion. Currently, the law indicates a base rate of 26% for short-term rentals, with a potential reduction to 21% for those renting out a single apartment. Landlords with two properties pay 21% for the first and 26% for the second, which frequently results in the State only collecting 21%. The Minister of Economy, Giancarlo Giorgetti, argues that the proposed increase to 26% reflects the growing challenges of finding long-term rental homes, particularly in large cities, which have seen a surge in short-term rentals. The government suggests that this hike may persuade some owners to withdraw their properties from platforms like Airbnb, thus making more homes available for long-term lease. Yet, the initial proposal for a straightforward increase to 26% faced immediate protest from Forza Italia and Lega, both vehemently defending landlords' interests. Antonio Tajani, the Minister of Foreign Affairs and Forza Italia's secretary, asserted, "We are absolutely against it. We will do everything to ensure the text is modified." Facing opposition from two of the three parties in the ruling coalition, the government has been forced to revisit the tax increase proposal several times—initially removing it from the budget law and then reinserting it under a potentially more complex rule. In the latest draft of the law, the reduction to 21% remains in place only for rentals not facilitated through online platforms or real estate agencies. If any contract is processed via Airbnb, the entire income for that year will be taxed at 26%. It is notable that according to government estimates, 90% of property owners utilize online platforms for rentals, meaning that the tax reduction would apply to only the remaining 10%. The projected increase in the flat-rate scheme by five percentage points could generate just over €102 million annually for the State. Forza Italia and Lega's criticism has not lessened; Forza Italia has confirmed plans to propose an amendment to strike the provision from the budget law, while Matteo Salvini, the Minister of Transport and secretary of Lega, insists this increase will be eliminated during parliamentary sessions. As the discussion around this tax continues, the implications for landlords, the housing market, and government revenues are poised to remain a contentious topic until the end of December, when the final decisions will be codified into law. Related Sources: • Source 1 • Source 2