What is IMU tax in Italy?
The Italian Municipal Property Tax (IMU) is a wealth tax on immovable property, such as buildings, building areas and agricultural land. It entered into force in 2012 and it was introduced by Art. 13 of Decree Law n. 201 of 6th December 2011, which was converted by Law n. 214 of 22nd December 2011. IMU replaces the former ICI tax (Municipal Tax on Immovable Property).
Following the Stability Law of 2014, IMU was abolished for main residences, excluding those which are part of cadastral categories A/1, A/8 and A/9, meaning luxury properties.
Who pays IMU in Italy?
The following subjects are required to pay IMU:
- owners of buildings, building areas and land;
- holders of the right in rem to the usufruct, use, dwelling, emphyteusis, leasehold;
- lessees of estate, even to be constructed or under construction, which is leased under finance lease;
- spouses who are assigned the marital home following legal separation, annulment, dissolution or cessation of all civil effects of the marriage;
- concessionaires in case of concession of State-owned areas.
Exemption of main residences
Following the introduction of Law n. 147 of 27th December 2013 (2014 Stability Law), IMU is no longer due on main residences, except for those included in cadastral categories A/1, A/8 and A/9. Therefore, owners of main residences falling under different categories are not required to pay IMU.
“Main residence” refers to the building unit where the taxable persons and their family members have their registered and usual residence.
Appurtenances falling under categories C/2, C/6, C/7 are also exempt from the tax, but only on one unit for category (in the case of two C/6 properties, IMU will be due on one of them).
How is IMU calculated in Italy?
The calculation of the taxable base is different depending on the type of property:
- Building area
- Agricultural land.
Taxable base for buildings
For registered buildings, the taxable base corresponds to the value of the property. This value is determined starting from the cadastral income (a value attributed by the Revenue Agency, which is obtained by multiplying the dimensions of the property by the valuation rate attributed by the Local Office on the basis of the estate’s cadastral category). Such cadastral income is revalued by 5% and a coefficient (known as multiplier) is applied, which is different for every cadastral category.
Taxable base for building areas
For building areas, the taxable base is represented by the market value on 1st January of the tax year, or starting from the date of adoption of the urban planning instruments, considering the following elements:
- territorial location of the area;
- building index;
- permitted intended use;
- expenses for adjustment works needed for construction;
- average market prices for areas with similar characteristics.
Taxable base for agricultural land
For agricultural land, as well as for uncultivated land, the taxable base corresponds to the value obtained by applying a multiplier equal to 135 to the amount of cadastral income, as resulting from the land register on 1st January of the tax year, revalued by 25%.
Multipliers for calculating the taxable base
Below are listed the multipliers, which vary depending on the type of property:
- From A/1 to A/11 (excluding category A/10): 160;
- A/10: 80;
- From B/1 to B/8: 140;
- C/1: 55;
- C/2, C/6, C/7: 160;
- C/3, C/4, C/5: 140.
The taxable base will result from the following product:
Cadastral income x 1,05 (5% revaluation) x Multiplier
Example of calculation of the taxable base:
The taxpayer owns a property, identified in the land register as A/2, with a cadastral income of €400,00.
Since the category is A/2, the multiplier is equal to 160.
The taxable base for calculating IMU will result from the following product:
400 x 1,05 x 160 = 96.000
Once identified the taxable base, the correct tax rate will be applied. Tax rates are established on a municipal level, on the basis of the intended use of the property. They are available on the website of each municipality or also on the Ministry of Economy and Finance website.
Tax rates are commonly expressed in thousandths of percentage; indeed, it is not unusual to find the value of a tax rate followed by the symbol ‰ in municipal resolutions.
Continuing with the example provided above, whose taxable base amounted to 96.000, the correct tax rate for the intended use of the property needs to be identified, in order to calculate IMU.
Let us assume that the property in question is a second home, which is at the owner’s disposal (thus there is no lease or concession for free use to family members). Let us also assume that the municipality where the property is located applies a tax rate of 1,14‰ for this intended use.
The amount of tax due for the year will be equal to:
96.000 x 1,14‰ = 96.000 x 0.00114 = 109,44
This is the value of IMU due, which has to be divided into advance and balance payments.
IMU deadlines: advance and balance payments
The tax must be paid in 2 instalments, since it is divided into advance and balance payments.
- The first instalment, the advance payment, must be made by 16th June of every year, on the basis of the relevant tax rate and the deductions of the twelve months of the previous year.
- The second instalment, as a balance payment for the whole year, must be paid by 16th December, with any adjustment on the first instalment, on the basis of the approval resolution of the tax rates by the municipality where the property is located. In case of failure to publish the resolution by 28th October, the tax rates adopted for the previous year will be applied.
For the purpose of calculating IMU, it must be noted that such tax is due for calendar years, in proportion to the share and the months of ownership of the property. A Taxable subject becomes such at the time of conclusion of the deed of sale. If the deed was concluded prior to the 15th of the month, IMU must be paid for the entire month; otherwise, the tax is due from the exact day of the change in ownership.
It is possible to pay IMU through one of the following means:
- F24 model;
- Postal money order;
- PagoPa platform
How to pay outstanding IMU: voluntary correction (ravvedimento operoso)
In case of late payment of IMU, some sanctions and interests are added to the amount of tax due. According to the provisions of Art. 13, par. 1 of Legislative Decree n. 471/97, failure to pay or late payment is punished with the following administrative sanction:
- A 15% fine, reduced to 1/15 for each day’s delay, if the delay does not exceed 14 days;
- A 15% fine, if the delay is between 15 and 90 days;
- A 30% fine, if the delay exceeds 90 days (Art. 1, par. 774 of Law n. 160/19).
If the violation has not been ascerted and no investigation has been activated that the taxpayer has been officially informed of, it is possible to rectify one’s position through voluntary correction. This way it is possible to reduce the amount of the sanctions.
Depending on the number of days between the payment and the deadline, it is possible to opt for different types of voluntary correction:
Super-short or “sprint” correction
It is possible to resort to this type of correction if the payment is made within 14 days from the deadline. Within this time period, the sanction is 0,1%, equal to 1/10 of the ordinary 1%, for each day’s delay.
If the payment is made within 30 days from the deadline, and after the fourteen-day deadline for sprint correction (precisely from days 15 to 30). The sanction is reduced of 1/10 and in this case it is equal to 1,5%, to be calculated on the amount of tax due.
The sanction is reduced to 1/9 and it is 1,67%, if IMU is paid within 90 days from the deadline for the payment, or from the deadline for submitting the declaration, in the case of regularisation of omissions or errors made in the declaration.
The payment is made after 90 days, but, in any case, within 1 year. In this case, the sanction is reduced of 1/8 and it is 3,75%.
Very long correction
In this case, there are two different reductions, depending on whether the payment is made within or beyond the two-year term. In the first case, the sanction is reduced of 1/7, thus amounting to 4,29%. On the other hand, if the payment is made, the sanction is reduced of 1/6, thus it equals 5%.
The last case of reduced sanction takes place during the term in which the violation is notified to the taxpayer. If the taxpayer makes the payment prior to the issuing of the tax files, the sanction is reduced of 1/5, which equals to a 6% reduction.
N.B.: Voluntary correction may be performed only through a F24 model.
IMU tax benefits
A series of tax benefits are available in some cases, and they provide up to a 50% reduction of the taxable base for IMU.
Cases entitling taxpayers to the 50% tax benefit:
- Buildings declared unusable or uninhabitable;
- Buildings granted on a free loan basis to first-degree relatives, through a registered agreement, excluding cadastral categories A/1, A/8, A/9;
- Buildings of historical or artistic interest;
25% tax benefit on IMU: lease at an agreed rent (Law n. 431/1998)
The 25% tax benefit applies to property which is leased at an agreed rent (thus, the amount of rent may not be determined freely but it is established through the Territorial Agreement of the relevant municipality), if such property complies with the limits and criteria set forth in the Territorial Agreement signed by the social partners.