Italian legislation provides, under certain conditions, exemption from registration tax for those who opt for flat rate tax in a rental contract, even in the event of early termination.
In this article we will examine a recent response provided by the Revenue Agency to a question posed by a taxpayer on the topic of flat rate tax and the tax treatment of early terminations of rental contracts.
What happens if you opt for flat rate tax and decide to conclude the contract before the deadline? Is it necessary to pay stamp duty or is there an exemption?
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The taxpayer’s request: exemption from registration tax for early termination
The taxpayer asked:
“With the registration of a rental contract I chose the flat rate tax. Having now to notify the Revenue Agency of the early termination of the same contract, is it true that I do not have to pay any amount by way of registration tax?”
The request is clear: those who have opted for the flat rate tax are wondering whether they are subject to registration tax in the event of early termination of the rental contract.
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The response from the Revenue Agency: exemption confirmed but with clauses
The Revenue Agency has confirmed that, for the termination of a rental contract in which the dry tax rate has been chosen, it is not necessary to pay any amount for the registration tax. This tax regime, in fact, also replaces the registration and stamp duties that would normally be due for terminations and extensions of rental contracts.
The exemption from registration tax is applicable provided that, at the time of early termination, the period for which the dry coupon option was exercised is still active.
In other words, the flat rate tax option must have been exercised and valid until the date of early termination. Furthermore, in the event of an extension of the contract, the exemption applies only if the coupon option has been exercised for the duration of the extension.
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What happens in the case of multiple tenants?
An important aspect to consider concerns multi-tenant leases. The response from the Revenue Agency specifies that the exemption from registration tax in the event of early termination is valid only if all the lessors of the contract have chosen the flat tax rate.
If even just one of the lessors has not exercised the option to pay the tax, the registration tax will be due for the termination of the contract.
This aspect is crucial for taxpayers who manage rental contracts with multiple owners: the choice of flat rate tax must be unanimous to avoid paying registration tax in the event of early termination. If one of the lessors does not adhere to this tax option, the entire contract falls under the ordinary regime regarding registration tax.
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Conclusions and reflections
The response from the Revenue Agency clarifies a situation of great importance for those who have chosen the flat rate tax, as it allows for a better understanding of the tax benefits in the event of early termination of a rental contract. However, the presence of multiple lessors requires coordination between the parties to fully benefit from the exemptions provided.
Anyone wishing to take advantage of this exemption should carefully check their own tax position and that of any other lessors.
In summarythose who have opted for the flat rate tax and intend to conclude a rental contract early will not have to pay the registration tax, provided that all lessors have exercised the same tax option.
