The dry tax rate increases to 26% of a second rental home, the new rate on rental income due from January 1, 2024.

The new flat-rate tax will only apply at an increased rate of 26% from the second rental home. However, nothing will change for the first or only rental property, the rate remains at 21%. This is clarified by a new circular issued by the Revenue Agency, which implements the procedures of the latest budget law. A landlord who rents out multiple homes will be able to choose one for each tax period and thus benefit from the preferential rate of 21%. The choice must be indicated in the tax return for the relevant tax period. The new rate of 26% applies to rental income that expires from January 1, 2024, regardless of the date on which the relevant contracts were signed and the payments received.

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Estate agents

New rules also apply to real estate agents and managers of electronic rental portals, who will always have to withhold a withholding tax of 21% as an advance when paying the owner, regardless of the tax regime applied by the beneficiary.
The agency also sets rules for non-resident brokers. Persons who live in another EU country and do not have a permanent establishment in Italy can fulfill the obligations directly or appoint a tax representative in Italy. Non-EU entities that have a permanent establishment in one of the EU Member States fulfill their obligations through the permanent establishment and, if this is not done, must appoint a tax representative.

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VAT numbers

As the Court of Cassation has explained, the dry tax can also be applied when the tenant is a company, VAT number or company that rents a home to its employees, customers or suppliers. The requirement to let property other than in the course of a business, art or profession applies solely to the landlord, contrary to what the Revenue Agency has supported for the past thirteen years. The ruling, filed on May 7, states that “the quality of the tenant and the traceability of the rental, in the case of residential use, are not relevant to the professional activity of the tenant.”