If you are interested in buying a property in Italy, one of the requirements is that you hold an Italian Tax Code (or Codice Fiscale). In one of our previous articles we described what an Italian Tax Code entails; this article instead will focus on the process of obtaining one and it will analyze the tax implications for people who hold an Italian Tax Code.
What is an Italian Tax Code
First of all, an Italian Tax Code is an alphanumeric code which is assigned to every Italian citizen who is born in Italy. The Tax Code is made up of 16 characters and it is generated by combining an individual’s date and place of birth, sex, name and surname. The Tax Code is very similar to the US Social Security Number but it is used more frequently in everyday life; if you need to buy medicine, for instance, the pharmacist might ask you for your tax code because you can deduct costs for the purchase of medicines from your yearly tax return (provided that you keep the relative receipt issued by the pharmacy). The Tax Code is also required to open a bank account, obtain a mortgage, rent a house, pay taxes and purchase a property. The Italian Tax Code is usually printed on a green plastic card and on the Italian National Health Card (Tessera Sanitaria). However, this card is only issued to Italian citizens who reside permanently in Italy.
Where to apply for an Italian Tax Code
As mentioned above, the Tax Code is automatically assigned to every Italian citizen who is born in Italy and is registered at the Registry Office of an Italian municipality. Nevertheless, if you were not born in Italy but you reside there, you can apply for a Tax Code at any Italian Revenue Office (Agenzia delle Entrate) by providing them your ID. If you sign a written authorization you can also delegate someone else as your representative in order for that individual to apply for the Tax Code on your behalf.
On the other hand, if you would like to obtain a Tax Code but you do not reside in Italy, you need to apply for one at the Italian Consulate which covers the jurisdiction where you reside. The Italian Consulate usually requires the applicant to mail a form with the applicant’s personal information and a copy of his or her ID. In both cases, applying for an Italian Tax Code is free of charge.
The Tax Code and the real estate purchase process
As mentioned above, an Italian Tax Code is required to purchase or rent a property, obtain a mortgage, pay taxes or sign a contact. Hence, if you are interested in buying the house of your dreams in Italy even though you have not moved to Italy yet, you need to apply for an Italian Tax Code as it will be needed for a number of steps involved in the process – from the Preliminary Contract to the final Deed of Sale.
Many believe that having an Italian Tax Code implies paying taxes in Italy, however, this is not always the case. In other words, you must pay taxes in Italy only if you earn a taxable income. Nevertheless, if you buy a house in Italy you will need to pay taxes when you purchase the property and you will also be required to pay small yearly taxes. These include:
• IMU: a municipal tax you need to pay because you own a property.
• TARI: a waste tax.
• TASI: a fee that needs to be paid to the municipality for indivisible services such street lightening and road maintenance.
If you would like further information about the requirements needed to purchase a property in Italy, please feel free to contact us at firstname.lastname@example.org for a free consultation. We will be happy to assist you!