Bed and Breakfast is a great way to monetise on a holiday home. In fact, more and more investors are looking for properties in Italy fit for Bed and Breakfast activities!
What is holiday letting?
According to the Italian tax Law, a holiday letting is a rent contract lasting 30 days or less.
The contract, unlike commercial and residential contract, is very flexible and it does not require any registration at the local tax office.
As a host what do I have to do? As a host you are required to:
*) Provide the check-in service
*) Let the guest sign the accommodation contract
*) Communicate within 24 hours from the check-in the Identity of the guests to the Questura (Questura: The complex of police services dependent on the questore)
*) Issue the receipt of the stay
*) Clean the apartment/ house
You are not required to deal with the “City tax” if you operate through an online platform, otherwise you should also collect and pay such tax based on the local municipality rules.
Can I offer other services than just a let?
*) If you run your Airbnb as a nonprofessional, you can only provide cleaning of the premises and fresh linens; this rule is strictly enforced by the Italian authorities and any extra service provided will be a presumption of a business activity.
*) If you want to provide extra service, you are required to operate as a business.
Can I deduct the Airbnb fee?
Unless you operate as a professional business you cannot deduct any cost, including the Airbnb fee.
What is the advantage of operating a business?
Operating as a business allows you to:
*) Provide extra services other than accommodation,
*) Write off costs and pay taxes on your real profit,
*) Access to public grants and loans to purchase the property.
As a business you can write off costs associated with the portal fee, the property manager fee, as well as cleaning and fittings of the property.
Furthermore, you can opt for the “regime forfettario” and benefit of a flat 15% (5% if it is a new business) tax rate up to € 65,000 of revenue.
How do I setup my business?
You can setup your Bed and Breakfast in different ways:
The required compliance is the following:
*) Get your Partita IVA
*) Register at the local Chamber of Commerce
*) Register at INPS
*) Register your property at the local Comune
How do I pay taxes on my B&B income?
*) Just like any other source of income, you must file your annual tax return including the income made of your holiday lets.
*) If you rent the property you own you should disclose this source of income in the “Property income” section, whereas if you sub-let the property you must include that income in the “Other income” section.
You can opt for two types of taxes: IRPEF or Cedolare Secca
IRPEF requires you to pay the progressive tax rates on 95% of the income made (5% is a tax-free reduction to compensate costs incurred).
Cedolare Secca taxes your whole income at 21% flat.
Usually “Cedolare Secca” is a more efficient option; unfortunately, you cannot claim any deductible items against it. Often times (especially if you renovated the property) the IRPEF rates is a better option as you can claim house renovation costs against taxes.
If the online portal already deducted a 21% tax at source, you could credit it against your tax liability.
How can the tax office find out about my B&B income?
Since 2017, every property manager and online portal is required to file an annual return disclosing the total amount of revenue earned by each host during a tax year.
On top of that the online portals must deduct a 21% tax at source; it is therefore very likely that the tax office will find out about your income source.
What happens if I do not file?
If you do not file your taxes you expose yourself to a minimum liability of € 250 up to € 1024 for not filing, on top of a minimum fine of 120% of any tax due.
The tax office knows if you rented your property through an online portal as the portal itself sent a recap return (Certificazione Unica) to the tax office.
How can we help you?
We can help you in different stages of your B&B business, we can:
Draft the accommodation contract
Register your property on the “Questura” portal
Evaluate the convenience of operating as a Business
Set up your business
Provide the ongoing accounting and tax compliance service
File your annual return
Provide support for your tax payments
The information on this page is compiled with the greatest care; nevertheless, no rights may be derived from this information and optional attachments. We recommend that you check with the embassy in your country for the specifications and available information regarding your plans.