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Italian government abolishes Council Tax (ICI) for residents

June 25th 2008

Starting this year, Italy's main property tax (ICI) will be abolished in June for residents of the “Prima Casa” (first house). This has been confirmed by the Economy Minister Giulio Tremonti.

ICI stands for "imposta comunale sugli immobili", that is, a local tax payable on both land and buildings, which has until now been payable by property owners both residents or owners of a holiday home. It was first introduced in 1993 with the idea of giving more responsibility to the local authorities to create their own income source and to not be as dependant on the central government. The local municipalities use the income generated by the ICI to support local needs, such as improving roads, organising events, maintaining public areas, parks and fountains and contributing towards the salaries to the municipality employees.

The ICI is calculated on the basis of the fiscal value of the property, and it varies according to the area and type of property. So there is no standard value, however an average cost would be in the region of 150 euros a year, well below the UK council tax.

This tax has now been abolished by the recently elected Berlusconi government as it was a promise that was made during the recent election campaign. Not all property owners, however, will benefit from this: luxury properties and historical buildings will still be subject to ICI and second homes (whether for Italians or foreign home owners) will be taxed as before.

The Finance Minister, Giulio Tremonti, has always been known for basing his policies on detaxation and cutting costs. During the former Berlusconi government (2001-2006) much effort had been put into reducing taxes on property, for example the inheritance tax was abolished then, only to be reintroduced by the following government restricting inheritance tax for properties worth over 1 million euros.

Eliana Andolfo from comments; “Even if no other official steps have yet been taken, it is more than likely that in the near future the new government will adopt more steps to assist home owners and to encourage more people to invest in property, whether resident or non-resident”.

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