The property tax (IMU) becomes finally, though partially, deductible for business income purposes

By Dr. Martin Lechner, Pichler Dejori Comploj Partner

After two tough years in which the property tax paid by owners of Italian real estate dramatically increased, the Italian Parliament just passed a bill that will at last give breath to an exhausted real estate sector.

The IMU has always been a non-deductible tax for business income tax matters (i.e. IRPEF/IRES), implying an increase of its financial and economic impact on the bottom line of the P&L of the companies.

The Financial bill for the fiscal year 2014 lessens this doubled negative impact, making the tax partially deductible. Starting from the fiscal year 2013, the IMU on commercial non-current assets will now become 30% deductible for business income tax matters.

An example will help illustrate the concept: for income tax matters, a company paying a yearly IMU of 1 mil. € will now be able to deduct € 300.000 of it. With an IRES tax rate of 27,5%, the partial deductibility of the IMU will save the company € 82.500.

For individuals nothing has changed since the introduction of the IMU in 2012. The taxation, although considerably higher than the previous one (ICI), has simplified the tax compliance of the foreign individuals which hold properties for their personal disposal only. In such cases, having no other Italian income, no tax return has to be filed anymore.

Dr. Martin Lechner, Partner
Pichler Dejori Comploj Partner, Bolzano, Italy
T:  +39 0471 288333
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Dr. Martin Lechner is Partner of Pichler Dejori Comploj Partner focusing on real estate, renewable energies, national and international taxation.

Pichler Dejori Comploj Partner is providing advisory on tax issues, business management and corporate law in a reliable and competent way in relation to national and international clients operating in several branches and with different legal forms for now over 30 years.
We are an independent firm of Chartered Accountants, Tax Consultants and Auditors, conducting our activities primarily in South Tyrol and Northern Italy.
The geographical position in Bolzano, South Tyrol - Italy, makes our firm an ideal meeting place between Italian and German economic, legal and linguistic areas. In Bolzano German can be used as official language.

published: February 2014

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