Italy recently rejected an important amendment to the proposed budget law. That amendment would have raised the flat tax on short-term rentals. The previous tax break will stay — at least for now.
Specifically, lawmakers had considered replacing the current mixed tax scheme with a uniform 26% “cedolare secca” on income from short-term rentals. That would have made the tax the same, whether you rent one apartment or several.
Several parties in the ruling coalition opposed this rise. They worried it would penalise small landlords and middle-class homeowners. Because of this opposition, the government dropped the plan.
Therefore, the flat tax increase will not become law — landlords will keep the former tax scheme for now.
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What the old and proposed tax rules are (or would have been)
Under current rules (2024–2025), if you rent a property short-term (less than 30 days), you can choose “cedolare secca” (flat tax).
- The first apartment you rent short-term enjoys the lower rate of 21%.
- If you rent more than one apartment, the second (and any additional) property gets taxed at 26%.
The 2026 budget proposal would have abolished this split. All short-term rental income — from the first unit onward — would have been taxed at 26%.
If the change had passed, many small landlords would face a higher tax. That could lower their net income and make short-term renting less attractive.
What changed now: rejection means current rules stay
Because Parliament rejected the amendment, Italy keeps the current taxation scheme on short-term rentals: 21% for the first unit, 26% for additional units.
This decision gives relief to many landlords and small property owners. In particular, it spares those who rent just one property from having higher taxes.
But the debate doesn’t necessarily end here. Italy’s next budget drafts might reintroduce proposals. Also, lawmakers signaled they may tighten other parts of regulation, for example lowering the threshold at which short-term rentals are treated as “business activity” — with heavier paperwork and taxes — from owning 4 properties to perhaps 2.
So, while nothing changed now but the environment remains uncertain.
What this means for expats, foreign landlords and non-residents
For expats this implies:
- If you own a single apartment in Italy and rent it short-term (for instance to tourists), you can still use the 21% flat tax. That remains unchanged for now.
- If you own more than one property, the second and later units remain taxed at 26%. So if you manage multiple listings, tax planning stays relevant.
- You — like any host — must keep detailed paperwork: contracts, receipts, registration codes (if required), and income declarations. The same obligation applies to Italian residents.
- Because of possible future changes (business-threshold lowering, more reporting duties, or new amendments), you should monitor developments or ask a tax accountant / commercialista to review your situation — especially if you own more than one property or you switch between short-term and long-term leases.
Thus, for now an expat’s decisions don’t need a drastic re-think. But staying informed remains prudent.
Why the amendment failed — and what remains debated
The proposed tax rise triggered political conflict. Some parties in the government coalition opposed the increase. They argued that raising the tax on short-term rentals would unfairly burden homeowners and small landlords.
At the same time, supporters of the increase framed it as a way to ease housing pressure — especially in big cities with heavy tourism — and to push landlords toward long-term rentals.
Now, with the flat tax hike rejected, lawmakers may still pursue other regulatory changes — for example lowering the number of properties required to fall under “business rental” status. That means the state may shift strategy: rather than raising taxes uniformly, it may regulate scale and volume of rentals.
The debate is not over
Italy’s recent decision to reject the amendment marks a pause, not a full stop. For now, the tax benefits for short-term rental owners remain. For expats, landlords and small investors, this is good news. But uncertainty stays. National and EU pressures, shifting housing needs, and political debate may still lead to changes.
