Starting a short term rental business in Italy: tips and suggestions
Italy is typically associated with its idyllic landscapes, its renowned cuisine, as well as its contributions to the worlds of art and fashion. However, with its strategic location and its receptive attitude towards globalization, Italy has become more than just a tourist’s dream, opening up its doors to a wide range of foreigners who are looking to work or do business in Italy.
With that being said, starting a company in Italy is no walk in the park, as you’ll have to deal with Italian law and a lot of red tape. Opening up a limited liability company in Italy can be quite the process, whether you are simply registering a company as is or looking for foreign investors to get in on the action, but we are here to help you, and we’ll start off by telling you about one of the best and easiest ways to do business in Italy: Short-term rentals.
What are short-term rentals (also known as tourist rentals)?
A short-term rental agreement is a “simple” tool for turning your current property into a source of income that can be either a primary source or something extra on the side. If you are looking for an easy way to make your “second home” profitable without having to drop your whole life and attend to the every need of a potential project, this is certainly the best choice you can make without a major direct commitment.
In fact, you can make your property income for a maximum of 30 days per guest without technically operating as a business, at least under the current guidelines as stated in Italian legislation.
The features of short-term rentals
Short term rentals must satisfy the following three credentials:
This means that following the above guidelines can help you in establishing a small side project without ever falling into the business burdens of the Italian tax system.
Management of short term rentals
The short-term rental is relatively simple to manage with the help of intermediaries, who can assist you and operate on your behalf by means of booking portals, the most popular of which are Airbnb.it, Booking.com, Wimdu.it or Homeaway.it. If you decide to use these booking platforms, keep in mind that they apply 12% commission to the guest’s cost, and the owner pays a 3% commission as well. When you’re coming up with a business plan, be sure to factor in these costs as they will be sure to play a part in your overall business set-up.
While you don’t have to register your “company” with the chamber of commerce, you will certainly have to register your guests on the AlloggiatiWeb portal, which requires a sort of declaration that said guests will be staying in your place of residence.
This is necessary regardless of whether they are coming from outside or from within the European Union. Since this registration is clearly going to be a constant for anyone opening up such a business in the Italian market, be sure to familiarize yourself with the process as it will be one of your go-to procedures.
Some Municipalities (known as the Comune) require you to file a communication notifying them of your short term rental; furthermore, your local Comune might levy tourist tax. If that is the case, you must register online, and pay tourist tax quarterly. Make sure to comply with the local Comune requirements for this.
Most of the tourist tax are between 1 and 3€ per day per person.
If you are getting in on this activity for the first time, we recommend getting in touch with the central police station in your area for feedback and guidelines on the procedure, as any help or advice for such an essential process could pay dividends in the future.
Accepting Payments and Paying Taxes
This is an expressly free contract, bound only by the free negotiation of the parties involved, who also autonomously regulate the payment conditions. The only restriction, which is also valid for all types of leases, is that amounts over €2,999 must be made by traceable means of payment (bank transfer, check, credit card, and so on) rather than cash.
Rental income must be reported in the RB section of your tax return, but the advantage you will have is that instead of paying personal income tax, the owner can opt for a flat rate tax, which can certainly be beneficial.
Why should I consider short-term rentals?
Essentially, according to Italian law as stipulated for this kind of activity, short-term rentals are not businesses, which means that you’ll have better Italian tax options compared to “official” businesses. The key is to make sure that you stay within the guidelines to classify as a “short-term rental,” as this is vital in qualifying for the above-mentioned breaks.
What we’ve provided you with is a very brief overview of the issue at hand, and there is much more to consider. As with any “business” in Italy, a good accountant is key in assisting you with your ventures and can provide you with specific information that is particular to your situation.
Short term Rental in Italy in 2020
Due to COVID 19 spread in Italy, tourism's sector has ben drastically slowed down since the travels to Italy have been limited as well. However many measures have been taken and Italy is planning to reopen all his businesses between June and July with the proper precautions.
Italian rivieras all around the coast, are planning and implementing social distancing measures as instructed by the government.
Want to read more? Check out also our articles about filing your taxes in Italy, airbnb taxes in Italy, or our guide for retiring in Italy.
For any questions or concerns, feel free to get in touch with us at your earliest convenience, as we’re always ready to help you make the jump to starting a business and setting up a company in Italy.
After moving back to Italy from the United States in 2013, I realized how much an accounting and tax firm was needed to help expats living in Italy to comply with the local tax regulations.