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Italy's Deputy Economy Minister Pier Paolo Baretta has indicated that the country's local property tax (IMU) will be superseded before the end of this year by a "service tax" that will encompass all the local taxes currently being imposed.
Funding of a cancellation of both the first payment of IMU on first residences, which is now due on September 16, and the final IMU payment in December this year, would cost around EUR4bn (USD5.3bn), and would need to be found from alternative sources of revenue, given that any reform needs to be revenue-neutral.
However, Baretta disclosed that the Government will be able to find the necessary funds (probably by means of a further government spending review) for the total reform of the tax, the announcement of which has been promised by the end of this month. In fact, it is now envisaged that IMU on first residences will be repealed and local property taxes will form part of a new unified local service tax.
It is probable that the service tax, which will amalgamate all present local taxes, such as that on waste collections, will be organized on a federal basis, but with more autonomy for municipal authorities on how the tax is to be applied and at what rates. Continued financial support from the Government to municipalities will however be necessary given that IMU currently generates a large portion of their annual revenues.A comprehensive report in our Intelligence Report series dealing with the issues raised by international property investment, and the possible taxation implications raised by such purchases, with an account of the likely (and some less obvious) potential countries for your consideration, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report15.asp
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