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Italy Finally Able To Cancel Second 2013 IMU Payment

by Ulrika Lomas, Tax-News.com, Brussels

03 December 2013


The Italian Government has finally been able to confirm that the second installment of the local property tax (IMU) on first residences in 2013, which was due on December 16, will be cancelled.

Currently being considered in parliament, the 2014 "Stability Law" is expected to approve the replacement of IMU on first residences within a new service tax that will cover all the local taxes currently being imposed from January 1, 2014.

However, the complete cancellation of the payments of IMU on first residency payments (except for that on luxury homes) due in 2013, promised by the coalition Government, has been elusive to finalize, mainly because of a difficulty in finding all of the necessary EUR4bn (USD5.4bn) in separate and certain funding.

The decree providing for the cancellation of the first 2013 payment, which had originally been due in June this year, was only issued in August. The present decree to cancel the second and final payment was actually expected in October, at the same time as the draft Stability Law, but was also delayed due to the difficulty of funding it.

In the event, the Government has been able to eliminate, not only IMU on first residences, but also the tax payable on rural buildings and agricultural land, at a total cost of EUR2.15bn, and has funded the measure largely through increased taxation of the finance and insurance sectors.

EUR1.5bn of the cost has been found by making a further change in the payment of federal and local corporate income taxes, such that a bank or insurance company will have to pay 130 percent on account this year, as measured as a percentage of the taxes it paid in the previous year, while companies in both sectors will also have to pay a federal corporate income tax rate of 36 percent only in 2013.

In addition, property owners in localities that imposed an IMU greater than the standard 0.4 percent of their properties' cadastral value will still have to pay half of the increase. For example, those in Milan, where the rate on first residences was fixed at 0.6 percent, will have to pay 0.1 percent by January 16, 2014 (extended from December).

An immediate comment on the elimination of the tax payable on rural buildings and agricultural land, but not on industrial and commercial property, was received from Giorgio Squinzi, the President of Confindustria. He failed to understand the difference in treatment, particularly as, he said, "a true economic recovery can only arrive from manufacturing companies."

A comprehensive report in our Intelligence Report series dealing with the issues raised by international property investment, and the possible taxation implications raised by such purchases, with an account of the likely (and some less obvious) potential countries for your consideration, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report15.asp
TAGS: individuals | tax | business | property tax | law | banking | insurance | real-estate | corporation tax | legislation | tax rates | Italy | legislation amendments

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