The purchase of a property in Italy as a non resident, and being a resident there, involves a series of fiscal obligations which must be met:

IMPOSTA SUL VALORE AGGIUNTO (V.A.T).

This is charged at 10% on all new properties except luxury homes, which bear 20%.

IMPOSTA DI REGISTRO (REGISTRATION TAX)

This is a tax payable when you purchase either agricultural land or a house, apartment or building plot.

Usually it is a fixed tax of 168 €.

IMPOSTA IPOTECARIA (MORTGAGE TAX)

This is a tax payable when you purchase either agricultural land or a house, apartment or building plot through a mortgage loan.

Usually it is a fixed tax of 168 €.

IMPOSTA CATASTALE (TAX FOR INVENTORY AND ASSESSMENT OF REAL PROPERTY)

This is a tax payable when you purchase either agricultural land or a house, apartment or building plot.

Usually it is a fixed tax of 168 €.

WEALTH TAX

There is no wealth tax in Italy.

ICI (LOCAL TAX)

The amount of the tax is calculated by reference to the "rendita catastale" (official value of the property) registered in respect of all properties in Italy.

The official values were, until recently, very low.

They are now rapidly rising, pursuant to a policy of the Italian Government that will result in the official values approaching the real value of the property.

In general terms, local taxes will cost less than taxes on a similar property in the UK, and will usually be between 0.4% - 0.9% of the estimated value of the property fixed by government tables.

TASSE LOCALI (ADDITIONAL LOCAL TAXES)

Some Municipalities raise additional taxation in relation to the services that they supply to people in the area.

These may include rubbish collection, cleaning of the streets and beaches etc.

Municipalities also have the right to raise a charge for the use of a vehicle in their area. Not all do so.

The amounts of these charges are not generally high.

CAPITAL GAIN TAX – REAL ESTATE

Since 2002 no more capital gain tax exists in Italy.

INCOME TAX - IMPOSTA SUL REDDITO DELLE PERSONE FISICHE (IRPEF)

Residents of Italy are subject to income tax on their worldwide income, whilst non residents are subject to income tax only on income arising in Italy, e.g. rental income from a property in Italy.

A person not resident in Italy for tax purposes must still make an annual declaration of any Italian income.

The 2008 income tax rates are:

You do not need to file a tax declaration if you have no income in Italy.

If you are resident in Italy, certain relief is available depending on the composition of the family, and the level of your income.

RENTAL INCOME

If you let a property in Italy you will be taxed on (usually) around 25% of the rental income received, depending on the area. Nevertheless you will be able to set off certain expenses against that income (repairs, management expenses, local taxes etc.).

NOTIONAL INCOME TAX

If you do not rent out your property in Italy, you will be liable to pay tax on the notional rental value of your property in Italy.

This is based on the official rendita catastrale (rateable value). It is normally small. It’s about 0,08% - 0,09% of the value of the property.

This notional income does not apply where you are resident in Italy and the property is your main home.

GIFT AND INHERITANCE TAX

Spouses and next relatives are charged a 4% of the value, just over € 1.000.000. Within € 1.000.000 no gift and inheritance taxes for Spouses and next relatives

For other relatives to the limit of the fourth line of relationship the tax is 6% of value with an exemption of € 100.000. Where the beneficiary is not related to the donor, gift and inheritance tax will be 8% of value with no exemptions.

• IMPOSTA IPOTECARIA FOR GIFT AND INHERITANCE

Usually it is a 2% value of property of calculated by reference to the "rendita catastale" (official value of the property) registered in respect of all properties in Italy.

• IMPOSTA CATASTALE (TAX FOR INVENTORY AND ASSESSMENT OF REAL PROPERTY) FOR GIFT AND INHERITANCE

Usually It is a 1% value of property of calculated by reference to the rendita catastale (official value of the property) registered in respect of all properties in Italy.