New flat tax: more savings for high incomes. Flat tax also for 30,000 rentals to companies

The comparison is not homogeneous, because the Irpef tax brackets changed in 2022, but the savings increased by more than 10% compared to 2.2 billion the previous year.

Almost two thirds of the Irpef savings go into the pockets of landlords who declare more than 50,000 euro in annual income. In practice, the 22% of beneficiaries collect 63% of the tax benefits, amounting to 1.5 billion. Certainly the higher rate paid by these taxpayers, who are in the last Irpef bracket (over 50 thousand euro annual income triggers 43%), has an impact. But the fact that declared rents tend to be higher as income rises also plays a role: those who fall into the second bracket (from 15,000 to 28,000 euro) submit an average of 4,600 euro per year to the coupon tax, against the more than 12,000 euro of those in the last Irpef bracket. This gap may depend on the type of dwelling, the number of dwellings owned and the city in which they are located.

There has been much debate over the years as to whether the 'cedolare' has contributed to the emergence of black rents. And whether, in any case, the benefit for the Treasury (i.e. the revenue from the substitute tax paid on rents put in order) was greater than the cost (i.e. the lower ordinary taxes paid on rents that were already declared). Looking only at Irpef, the break-even point for the Treasury would be if at least 8.3 billion of the total taxable income out of the 19.9 billion declared in 2023 were the result of emersion from the black economy. Certainly the growth in the number of landlords and rents in the flat tax area shows that there is some emersion. More difficult is to quantify it with the available data.

The report on tax revenues also shows a progression. In the declarations submitted in 2023 (referring to 2022), the declared dry coupon is worth 3.4 billion. But at the end of 2023 the accrued revenue has already reached 3.6 billion (+8.4 per cent per year). And the effect of the controversial 26% tax rate on houses rented out for short periods (excluding the first one), which was triggered last 1 January, is not yet visible.

In short, there do not seem to be many landlords who have abandoned cedular in order to take advantage of tax deductions - perhaps because they have not been able to pass on the building bonus credit - or in order to be able to update the rent to inflation.

What did the Supreme Court's decision 12395 of 7 May decide for the dry coupon tax on rents?
The Supreme Court affirmed that the 'quality of the tenant' is 'irrelevant' for the purposes of opting for the flat tax on real estate, provided that the lease is for residential use. The interpretation of the Inland Revenue, which since 2011 has forbidden the application of the flat tax to landlords who rent a house to a company or a corporation (which then uses it as a home for employees, clients and so on), is thus refuted. According to the Court of Cassation, the law - Article 3 of Legislative Decree 23/2011 - prohibits the coupon only when it is the landlord who operates as an entrepreneur.

What consequences will the Cassation ruling have?
For now, the Inland Revenue has not officially taken a position on the ruling. The hope of Confedilizia is that the Inland Revenue will give an indication that it will abandon the disputes currently pending with landlords who had applied the cedolare even though they had companies as tenants and who have seen themselves challenged by the Inland Revenue for non-payment of registration tax. It remains to be understood, moreover, if and when the telematic blocks which currently prevent tenants from opting for the cedolare when registering a rental contract with the RLI model where the tenant is a VAT holder (some landlords, for example, have opted for the cedolare in subsequent years) will be removed.

If the landlord is an entrepreneur, can he opt for the flat tax?
If the letting is conducted as a business, the flat tax is precluded by law. In general, it is the Civil Code that determines when a business is a business regardless of the number of dwellings rented by a natural person. In the case of short-term rentals, however, from 2021 there is a specific rule of law that triggers the presumption of business activity (and thus prohibits the flat tax) if there are more than four dwellings for short-term rental.

What has happened to the 'cedolare secca' for commercial leases?
The possibility of applying the cedolare also to rents that landlords who are natural persons derive from the rental of real estate for other uses is provided for in the enabling act for tax reform (Law 111/2023, Article 5(1)(c)).

Experts commissioned by the Ministry of the Economy have drafted a hypothesis, but the rule has not found a place in the delegated decrees passed by the government so far.