Penalties for landlords in Italy

It would appear that the Italian authorities are starting to understand the nature of the tax evasion that goes on in the rental of residential property in Italy.

Where the landlord/lady does not report the tenancy to the authorities and does not pay registration / income tax on the rent, the tenant is now given an opportunity to register the tenancy and effectively to report the tenancy to the authorities.

Several benefits will accrue to the whistle blowing tenant in this case. A new tenancy will start afresh by operation of law, as soon as the contract is reported, for a new 4 year term with an automatic right of renewal for a further four year term.

The rent payable will also be automatically reduced to approximately 1/3 of the current market rent.  Tenants become informants to the tax authorities and stand to obtain substantial benefits from this activity.

The unfortunate tax evading landlord/lady will suffer heavily. In addition to seeing his/her property “frozen” for an overall term of 8 years at a reduced rent, and being required to pay all tax previously evaded, defaulting landlords/ladies will have to pay penalties totalling 400% of the tax evaded.

The aforementioned landlords/ladies had until 6th June 2011 to regularize their positions.

So if you have a difficult landlord/lady and your tenancy agreement is not formally registered you may have some room for negotiation at last!