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Budget Law 2020 – New IMU

Italy’s 2020 Budget Law (art. 95) sees the merger of former property tax IMU (Imposta Municipale Propria) and the municipal service tax  TASI (Tributo Servizi Indivisibili) to create a new IMU (Imposta Municipale Unica) tax.

The payment for garbage collection and disposal known as, TARI (Tassa Rifiuti) remains a separate tax.

In switching to the new IMU, the Italian government aims to afford more autonomy to local municipalities (comune) in setting their IMU rates.

In addition, the government is looking to shore up tax-evasion. The annual difference between expected property tax revenue and what actually lands in the state coffers is estimated at EUR 5 billion. The 2020 Budget Law provides for voluntary corrections and reduced penalties making it possible for all property owners to remedy any delays or omissions in the payment of taxes on property held in Italy. This includes non-Italian nationals who may not be aware of Italian tax liabilities and payment deadlines.

The new IMU will facilitate the application of what was, in the past, a complex and dispersed system. From 2021, the government envisages making pre-filled tax return forms available to taxpayers.

Who pays the new IMU?

The new IMU remains a tax on second homes. As with the previous system, principal residences, unless they are luxury properties categorised as A1, A8 or A9 in the land registry, are exempt from the new IMU tax.

A principal residence is defined as the property in which the owner and/or members of the family habitually live and have their registered residence. If members of the same family have their habitual residence and registered residence in more than one property located in the same municipality, new IMU payment exemption will only apply to one of those properties.

The new IMU tax is paid by the property owner, or the holder of rights to use the property. There are exceptions to this and if you need any advice or guidance related to the new IMU, we are here to help.

How is the new IMU calculated?

As IMU is a municipal tax, the local municipality determines the rates they will charge on an annual basis.

To calculate your new IMU payments for 2020, you need to consult property records to ascertain the taxable value of your property. You also need to know how the property and/or buildings on a property are categorised in the land registry. Records can be retrieved from the municipal land registry or in some municipalities, online.

Depending on the land registry category, the following coefficient multipliers are applicable to a revalued taxable annuity of 5%:

Land Registry CategoryCoefficient
Group A (excluding A/10) and cadastral categories C/2, C/6 and C/7160
Group E and cadastral categories C/3, C/4 and C/5140
Group D580
Group A/1080
Group D, except buildings in cadastral category D/565
Group C/155

Here is a practical example: a taxpayer who owns a second home in category A/3 with a property tax value of € 600.

  • Property tax value € 600 + 5% revalued annuity = € 630
  • € 630 x 160 (coefficient for category A/3) = € 100,800
  • € 100,800 divided by 1000 by 10.6 = € 1068.48 (we applied an IMU rate of 10.6 set by the municipality)
  • € 1068.48 is the new IMU amount payable in two equal instalments.

If the property is classed in the luxury categories of the land registry: A1, A8 and A9, we would be able to deduct € 200 from the sum € 1068.48 = € 868,48.

The taxable amount may also be reduced by 50% for buildings registered as being of historical or artistic interest, buildings registered as uninhabitable and/or uninhabitable and unused, as well as buildings on loan between parents and children, which are used as a principal residence.

When do you pay the new IMU?

As with the old system, payment of the new IMU tax is made in two instalments each year. Payment deadlines are 16th June and 16th December 2020.

By 16th June 2020, taxpayers must pay half of the annual total of IMU due, applying the rate and any applicable deductions of the previous year. In other words, in June 2020, the first instalment due is equal to half of what was paid under the old IMU and TASI system for 2019.

The balance of the new IMU tax is due by December 16th and will be calculated on the basis of the rates approved by local municipalities, which will issue their local rates by 28th October 2020.

How do you pay the new IMU?

There are several options for payments of the new IMU tax:

  • Form F24 online at your Italian bank’s website;
  • Print your filled in F24 and pay at the post office or bank counter;
  • Fill in a payment slip at the counter of an Italian post office or use the post office
  • It is likely that local municipalities will start introducing their own public administration digital payment platforms in the coming months.
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