01 March 2015
We propose here again this information being extremely important and relevant for what lease signing is concerned. When the lease is drawn up between two individuals (Lessor and/or Lessee cannot be a company), the owner has the right to implement the “Cedolare Secca” flat rate tax system. This option guarantees a fiscal reduction for the lessor ( flat rate tax of 19% or 21% vs the standard taxation of approx. 45%) and some advantages for the lessee too, such as: saving money on ISTAT yearly rent adjustment and registration tax.
The Landlord applying the “Cedolare Secca” has however, the incontestable right, year after year, to waive such option, in which case, the rent shall be subject to adjustment as established by the Central Statistics Institute (ISTAT) to the extent of 100%. Additionally, the annual registration tax shall become payable.
| What it is | Introduced in 2011, it is an optional tax regime applicable on rental revenues in alternative to ordinary taxation. |
|---|---|
| When it is applicable | • In case of residential lease. • When the lease is drawn up between two individuals. • In order to implement the “Cedolare Secca” flat rate tax system. • Lessor and/or Lessee cannot be a company. |
| Rate Tax | Landlords pay a flat rate tax of 21% or 19%, depending on the contract, vs an ordinary taxation of approx. 45%. |
| How it is applied | The Landlord applying the “Cedolare Secca” has the incontestable right, year after year, to waive such option regarding the implementation of the flat rate tax system. In which case, the rent shall be subject to adjustment as established by the Central Statistics Institute (ISTAT) to the extent of 100%. Additionally, the annual registration tax shall become payable. |
| What advantages for the Tenant | • NO ISTAT consumer price index yearly rent adjustment. • NO registration tax, to be paid every year and corresponding to 1% of annual rent, plus Government stamps. • NO lease cancellation tax, to be paid upon tenancy termination. |
| Important Note | In the past a lease signed by a company represented a plus to any Landlords. Nowadays this may no longer be the case. As explained, should the Tenant be a company the Landlord cannot benefit from the flat rate tax system. For this reason, Landlords may either consider Individuals only or foresee a different (higher) rental for corporate Lessees, to compensate the higher tax rate on rental revenue. |
