"Cedolare secca" is a particular tax regime that private owners of properties in Italy now can use when they rent them out to private individuals.
It seems unnecessary to foreigners to deal with this kind of technical issues, but the creation of this fiscal regime is at the heart of a lot of time wasted chasing flats that the owner will never rent us at the offered price we find on the real estate portals.
In order to be allowed to exploit the cedolare regime, the flat must be owned by a private individual (or a group of people, like three brothers) and rented out to a private individual (or group of individuals, like a married couple). Using this regime the income of the rental agreement will be taxed only at 20%.
Normally, in all the other cases, the rent one gets from a property is added to the other incomes a person gets from his job and finicial investments, and is taxed at the higher marginal rate, close to 50%.
Two rules to remeber not to waste time and to ideally spare some money:
- if you are an individual, and you are paying the rent (NOT the company you work for) it's definitely better to look for a private owner adopting the cedolare, so not to be charged any inflation adjustment and the registry tax equal to 1% the yearly rent
- if you own a corporation (or work for one) and you want to put the monthly cost of renting the flat in the balance sheet of the company is of the utmost importance to tell it immediately to the real estate agent or the owner you are dealing with. Considering the massive difference in the tax rate, 100 EUR paid by a private individual are worth 80 EUR in the owner's pockets, the same 100 EUR paid by a company are worth a meager 50 EUR. We see a lot of people wasting weeks chasing flats where the owner will never agree to let them to a corporation due to this clear tax disincentive, so be careful!
As usual, for question or doubt, feel free to write us an email to: firstname.lastname@example.org