The 2026 Budget Law (Law no. 199 of 30 December 2025), reshaped the rules for short-term residential renting in Italy. From the 2026 tax year, an owner who rents more than two apartments on a short-term basis in the same year is presumed by law to be carrying on a business. This briefing explains the new threshold, how units are counted, the tax and compliance consequences of crossing it, the obligations that now apply to every short-term rental, and the points that owners — including non-resident owners — should know about.

What changed, and when

Short-term renting (locazioni brevi) are residential leases of no more than 30 days, entered into by individuals outside any business activity, possibly including ancillary services such as linen and cleaning (Article 4, Decree-Law 50/2017).

The presumption of business activity is governed by Article 1, paragraph 595 of Law 178/2020. Article 1, paragraph 17 of Law 199/2025 amended that provision, replacing “four apartments” with “two apartments” (and updating the reference year). The effect:

• Through 2025: an individual could rent up to four apartments short-term and remain a private landlord; business activity was presumed only from the fifth.
• From the 2026 tax year: the private regime is available only up to two apartments. From the third, the activity is presumed to be carried on in business form under Article 2082 of the Civil Code and is excluded from the short-term-rental tax regime.

Importantly, this is an absolute presumption (presunzione assoluta): it does not admit proof to the contrary. Once the threshold is exceeded in a given tax year, reclassification follows automatically.

what is counted as a unit?

• Per tax year. The count is made on a calendar-year basis, and the rule applies to individuals.
• Unit, not contract or room. “Apartment” means a single residential cadastral unit. Renting separate rooms within one apartment still counts as one unit; the threshold is triggered only by three distinct units.
• Residential units only. Only units in residential cadastral categories are counted — broadly A/1 to A/11 (standard apartments, villas, historic estates), excluding A/10, which covers private offices and studios.

Up to two units — the private regime

Owners who stay within two units keep the favorable flat substitute tax, the cedolare secca. The standard rate is 26%, reduced to 21% on the income of one unit chosen by the owner in the tax return. So a single unit rented is taxed at 21%; with two units, one (the owner’s choice) is taxed at 21% and the other at 26%. This is often summarized as “21% on the first, 26% on the second.”

The 2026 reform did not change these rates — it changed only the number of units compatible with the private regime. Ordinary IRPEF taxation remains available as an alternative.

From the third unit — business reclassification

One filing, several registrations

In practice the registrations are made through a single business filing, the Comunicazione Unica (ComUnica) to the Business Register, which bundles together:

• enrolment in the Business Register (Registro delle Imprese) at the Chamber of Commerce;
• opening of a VAT number (Partita IVA) — the general business tax and VAT identification number required of anyone carrying on a business activity in Italy
• the SCIA (Segnalazione Certificata di Inizio Attività) to the municipality, filed through the one-stop business desk (SUAP). The SCIA is a certified notice that allows the activity to begin immediately, without waiting for prior authorization (Article 19, Law 241/1990);
• the INPS and INAIL forms

The activity code generally indicated is ATECO 55.20.42 (accommodation services in rooms, houses and apartments for holidays), under the ATECO 2025 classification.

Income taxation and choice of regime

Once reclassified, income shifts from property/other income to business income, and the cedolare secca is no longer available. The owner then chooses an accounting and tax regime — ordinary, simplified, or flat-rate (forfettario).

Business status is not automatically more expensive. Under the forfettario, a 40% profitability coefficient applies, so the effective rate on gross revenue can be in the region of 6% (40% × 15%), subject to the forfettario’s eligibility conditions, including the revenue ceiling. Under ordinary rules, tax is charged on net profit, so operating costs become deductible. For owners with meaningful costs, or modest turnover, the business regime can compare favorably with the 26% cedolare.

VAT — assess case by case

Private residential rentals is VAT-exempt. The VAT position of a business-classified activity is debated. One reading is that providing accommodation services in business form attracts VAT (at the 10% rate applicable to tourist accommodation); another is that rentals are accompanied only by ancillary services may remain exempt under Article 10(1)(8) of Presidential Decree 633/1972. The correct treatment depends on the services actually provided and should be assessed case by case.

Social security (INPS)

Business status normally entails enrolment in the INPS Gestione Commercianti. For holiday-home and room-rental activity there is a notable feature: the fixed minimum contribution may not apply where this is not the owner’s sole or prevalent activity, with contributions then due only in proportion to actual income; a first-time registrant may also be able to apply for a reduction of contributions.

This area is contested: some case law has excluded the obligation to enroll in the Gestione Commercianti where the activity is limited to renting accompanied by linen and cleaning supplied outside the stay. The position should be verified for the specific case.

Obligations that apply to every short-term renting

The following duties apply regardless of whether the owner is a private individual or a business.

• National Identification Code (CIN). A national identifier assigned by the Ministry of Tourism (Article 13-ter, Decree-Law 145/2023, converted by Law 191/2023), recorded in the national database of accommodation facilities (BDSR) and replacing the former regional codes (CIR). The CIN must be obtained and shown in every listing or advertisement, online or offline.
• Safety equipment. Since 1 January 2025, every unit must be fitted with working gas and carbon-monoxide detectors and portable fire extinguishers (at least one per 200 m² of floor area and one per floor). Breach of the detector and extinguisher requirements carries an administrative sanction of €600 to €6,000.
• Other operational duties. Guest reporting to the police authorities via the AlloggiatiWeb portal and, where applicable, collection and payment of the tourist tax (imposta di soggiorno).

The platform / intermediary withholding (21%)

Where an intermediary or online platform (for example a property manager or a booking portal) collects the rent, it acts as a withholding agent and applies a 21% withholding on account (ritenuta a titolo d’acconto) on the gross rent, paying it via form F24 (tax code 1919) and issuing the owner a certification. The owner credits the amount withheld in the annual tax return.

The 21% rate is fixed and applies irrespective of the owner’s regime; it was kept at 21% even after the cedolare’s standard rate rose to 26%. For non-resident intermediaries: those with a permanent establishment in Italy act through it; EU intermediaries without a permanent establishment may comply directly or appoint an Italian fiscal representative; non-EU intermediaries must appoint one.

Non-resident owners — points to assess

Non-residents may own and rent Italian property, but crossing into business status brings Italian business compliance: an Italian tax code and VAT number, the registrations described above, and Italian reporting. Two questions deserve early advice:

• whether the activity gives rise to a permanent establishment in Italy; and
• how VAT obligations are to be fulfilled, including any need for VAT identification or appointment of a fiscal representative.

The 21% intermediary withholding applies regardless of the owner’s residence. Given the interaction with home-country taxation and any applicable double-tax treaty, non-resident owners should obtain coordinated Italian and home-country advice before the activity is structured.

Worked examples

Conclusion

With the new Three-Property Short-Term Rental Threshold that was introduced because of the 2026 Budget Law. It has reshaped and changed how many units’ owners can rent, along with what happens when one goes beyond renting the threshold that has been set. This with the other regulations can be hard to navigate and understand on which apply to you or don’t. At AdvaLux, our real estate law team help our clients find the best solutions and advice to help them understand their choices.