Budget Law 2020 – Imposta Municipale Unica (IMU)
Budget Law 2020 merges former Italian property taxes to create a new IMU
Italy’s 2020 Budget Law (art. 95) has seen the merger of former property tax IMU (Imposta Municipale Propria) and the municipal service tax TASI (Tributo Servizi Indivisibili) to create a new IMU (Imposta Municipale Unica) tax.
However, tax payments for garbage collection and disposal, known as TARI (Tassa Rifiuti), remain separate.
By switching to a new version of IMU, the Italian government aims to afford more autonomy to local municipalities (comune) in setting their IMU rates.
In addition, the government is looking to shore up tax evasion. Annual differences between expected property tax revenue and what actually lands in the state coffers runs at about EUR 5 billion.
The 2020 Budget Law also allows for reduced penalties if property owners the opportunity to make voluntary corrections to remedy delays or omissions for past IMU. This opportunity also extends to non-Italian nationals, who may not be aware that they have Italian tax liabilities and payment deadlines.
Overall, the new version of IMU facilitates the application of what was previously a cumbersome system. Moreover, from 2021, the government has started making pre-filled tax return forms available to taxpayers.
Budget Law 2020: Who pays the new IMU?
Because IMU is a tax on second homes, principal residences are exempt – unless they are luxury properties categorised as A1, A8 or A9 in the land registry.
For legal purposes a principal residence is the property in which the owner and/or members of the family habitually live and have their registered residence. If however, members of the same family have their habitual residence and registered residence in more than one property located in the same municipality, the new IMU payment exemption will only apply to one of those properties.
Property owners, or those with rights to use the property pay IMU. There are some exceptions to this and if you need any advice or guidance related to the new IMU, we are here to help.
Budget Law 2020: How is the new IMU calculated?
IMU is a municipal tax. Although rates are capped, each local municipality sets its own rates on an annual basis.
In order to calculate your IMU payments, you need to consult property records to ascertain its tax value category. Additionally, you will also need to know the tax value of any outbuildings on your property. Check the property records at your municipal land registry or, in some municipalities, you can retrieve property information online.
Depending on the land registry category, the following coefficient multipliers apply to a revalued taxable annuity of 5%:
|Land Registry Category||Coefficient|
|Group A (excluding A/10) and cadastral categories C/2, C/6 and C/7||160|
|Group E and cadastral categories C/3, C/4 and C/5||140|
|Group D, except buildings in cadastral category D/5||65|
To demonstrate how to calculate the new IMU, let’s take a practical example:
A second home in category A/3 with a property tax value of €600:
Property tax value €600 + 5% revalued annuity = €630
€630 x 160 (coefficient for category A/3) = €100,800
€100,800 divided by 1000 by 10.6 = €1068.48 (we applied an IMU rate of 10.6 set by the municipality)
€1068.48 is thus the new IMU amount payable in two equal instalments.
You may be able to benefit from a 50% IMU reduction for buildings of historic or cultural interest, buildings registered as uninhabitable and/or uninhabitable and unused. Likewise a reduction is available for properties on loan between parents and children, so long as they are used as a principal residence.
When is the new IMU payable?
In the same way as the old system, the new IMU tax is payable in two instalments. Payment deadlines are mid June and mid December every year. In other words, each June, taxpayers must pay half of the annual total of IMU due, applying the rate and making any applicable deductions from the previous year.
The balance of the new IMU tax is due each December, calculated on the rates approved by local municipalities, which issue their local rates by the end of October each year.
How do you pay the new IMU?
There are several options for payments of the new IMU tax. Either you can fill in an F24 form online at your Italian bank’s website or you can print off a filled-in F24 form and pay at a post office or bank counter. On the other hand, you can use a payment slip at the counter of an Italian post office or use the Italian post office website.
Although they are not yet widespread, local municipalities have started introducing their own public administration digital payment platforms.
With over 55 years experience of cross border and Italian property transactions, we understand that Italian property-related tax matters can be confusing. If you would therefore like further clarifications or want to discuss your situation, please contact us for a free consultation. We are here to help.
You may also like to read about tax measures in the 2020 Italian Budget Law.