With more than 90 million tourists visiting Italy each year the short term rentals market is a booming sector of the economy that is both buoyant and profitable. Of course, many of the tourists opt to stay in hotels although more than ever are choosing to stay in a short term rental.
This not only gives them a more authentic experience of life in Italy but it allows them total freedom when it comes to their daily itinerary. Another factor that attracts tourists to the short term rentals market is that it generally works out cheaper, particularly when you consider the floor space and facilities that they can expect in a rented apartment compared to a hotel room. This is an opportunity for expats who are already living in Italy to make additional income.
One of the most popular ways of renting out your property is by using large, well established online platforms such as AirBnb and Vrbo. These websites make it easy for you to advertise your property to a huge audience of tourists and visitors who are already looking for somewhere to stay in Italy.
However, if you own a property which you hope to rent on a short term basis you need to be aware of the relatively complex regulations and tax implications that apply in Italy, both on a national and regional level.
National Regulations For Short Term Rentals In Italy.
Before you rent your apartment you must visit your local police headquarters and arrange to access the ‘Alloggiati Web’. The Alloggiati Web is the Italian state police’s portal through which you can submit the necessary information about your guests; a police database that contains the names of all tourists who are staying in short term rentals.
Anyone who is offering accommodation for short term rentals must submit the details of their guests to the police within 24 hours of their arrival in the property. Ideally, you should send the details immediately after they’ve arrived.
You also need to have a written contract with your guests which they must sign on arrival at your property. Lastly, you also need to take photos of your guest’s passports or official national ID, and submit these to the Alloggiati Web with their other details, once again, within 24 hours of their arrival.
However, you only need to sign a written contract with your guests if your property is officially registered as a ‘furnished tourist apartment’, unlike, for example, a Bed and Breakfast which does not require a written contract to be in place.
Regional Regulations For Short Term Rentals In Italy.
Every region in Italy including it’s major cities like Rome, Milan and Florence have their own regulations for short term rentals. In addition cities and regions will have their own way of classifying short term rentals. In Rome for example, you will fall under the furnished tourist apartment category if you host three or less units. Also, you do not have to file taxes as a business in this case.
It is very important that you contact local authorities or a lawyer before you start listing your property.
Cleanliness Of The Short Term Rental.
If you’re using a platform such as AirBnb, then you will be expected to commit to a more enhanced cleaning regime than you might have had to do previously. In essence, their new requirements are as follows:
- Remove dust and dirt from all surfaces including floors, tables and countertops.
- Sanitize using strong chemical disinfectants to reduce bacteria and viral residues on all surfaces, including tabletops, doorknobs and even TV remote controls.
- Before you replace items in a room that you have cleaned, sanitize your hands to reduce the risks of cross contamination.
- Refer to the AirBnb checklist for further best practices which are regularly updated.
The Italian government has also issued a new set of cleaning guidelines for tourist accommodation, including short term rentals, however these protocols do vary from region to region. To find out the local authority’s requirements you should consult the regional town hall website for more details.
Safety Considerations For Your Guests.
You want to make your guests feel as safe as possible while they are staying in your property. One of the best things you can do is to print out a list of helpful phone numbers and instructions in case of an emergency. The phone numbers should include:
- Emergency numbers including the local police, fire brigade and ambulance.
- Contact number for the nearest hospital or clinic.
- Your own phone number so they can call you if they have any queries.
- A back up contact number that your guests can phone in case you miss their call.
General National Taxes For Short Term Rentals In Italy.
The tax codes in Italy are anything but simple however you are obliged to pay them so you need to be aware of your responsibilities. The taxes you are required to pay will vary depending on your circumstances as well as from region to region; but there are general regulations that you must be aware of. It’s highly advisable to contact a local lawyer or tax expert to ensure that you are in compliance with the codes to get the specific information that applies to you personally.
As a general rule though, any income you make as an AirBnb host is taxable and will be subject to rental tax, VAT or income tax. In Italy, your tax form must be submitted by 31st October using the ‘Modello Redditi Persone Fisiche’ or, if you’re using a Modello 730 then it must be submitted by the 7th July.
To find out if you need to declare the amount that you are earning you should contact the Revenue Agency because if you are only rarely renting your property you may fall below the tax threshold. You can also ask the Revenue Agency if you are eligible for any allowances or tax reliefs; something which will be determined by your overall financial situation and other economic activities.
Personal Income Tax In Italy.
Income tax in Italy is calculated under the IRPEF scheme. The rate is calculated each year on the basis of your total income. This includes income from short term rentals, home sharing and other property related incomes and is levied at a rate of between 23% and 43%.
When you use the IRPEF scheme you can claim deductions for property renovations and other costs associated with your short term rentals; so make sure to ask a tax expert to find out what you are entitled to claim back!
Rental Income Taxes In Italy.
As an alternative to the IRPEF scheme you may be able to use the ‘Cedolare Secca’ which charges taxes at a rate of 21%. This tax rate does not take your other income into account and is only applied to your rental income.
However, this tax rate is only applied to ‘non-professional’ hosts who rent their properties. This means that this rate cannot be used by legal entities such as holiday rental companies or people who professionally manage rental properties.
Nonetheless, you should certainly find out from your tax office if you are eligible because you can make significant savings on your tax bill!
Since 2017, Italy has introduced a law which means that companies such as AirBnb must collect rental taxes on behalf of the government, however AirBnb has challenged this in court, and as yet, no decision has been reached.
General Regulations And Required Permissions.
Before you set out to rent your property you must ensure that you are allowed to do so. There are several main reasons why you may be restricted from doing so, including local laws, community rules and your own contracts. To be completely sure as to whether you are allowed to rent your property, always check with a lawyer first!
However, there are general principles which you can apply to your situation to help you determine whether you are able to rent your property on a short term basis.
Existing Contractual Agreements And Permits.
In some cases building regulations, contracts or community rules have strict restrictions that prohibit you from subletting or renting your apartment to guests. You should review any existing contracts that you have already signed with the municipal authorities or your landlord if you are renting the property yourself.
Restrictions Relating To A Mortgage.
If you have a current mortgage on your property then there may be contractual conditions which mean that you cannot rent or sublet it to others. To find out if this applies to you then just check with your bank or the lender of the mortgage.
Subsidized housing will most likely have rules in place which prohibit you from renting it out to others. There may be certain exceptions to this general rule but to find out for sure you’ll have to check with your own housing association or local authority.
Housemates And Shared Accommodation.
If you are living in a shared house with other flat-mates then you will need to discuss the rental with them in advance. They may be happy for you to do so, in which case it’s advisable to draw up a written agreement with them to avoid any disputes down the road. You may agree to share some of the income with them and determine the etiquette of the guests with them as well.
European Union Consumer Protection Laws.
The EU has strict consumer protection laws which state that when you provide a customer, or in this case a guest, with a service then you must specify exactly what they will be paying for. This means that you must provide them with a detailed explanation of the property as well as any other services you intend to offer them.
This is largely a formality but misleading advertising can result in hefty fines.
Great Way To Create A New Income Stream In Italy.
Italy’s short term rentals market is extremely good and with millions of tourists visiting each year you’ll rarely find yourself short of guests looking for somewhere to stay.
Of course, there are regulations, taxes and community rules to take into account but if you make sure that you are in compliance with these, and other conditions, then you will have no problems.
Renting your property to guests on a short term basis means that you can leverage higher rates than if you were to do so on a long term basis and thus, you can create a good stream of passive income.