Italy's Controversial Tax Proposal: End of Short-Term Rental Breaks Sparks Debate

Italy plans to remove a tax break on short-term rentals as part of its 2026-2028 budget. The current differentiated tax system allowed a reduced rate on one property, but the government aims to impose a unified 26% tax. The proposal faces political and industry opposition.

Italy's government is proposing to eliminate a tax break on short-term rentals in its 2026-2028 budget plan, as indicated in a draft released on Monday. This change targets a prevalent market in Italy's tourist-heavy cities but has sparked political and public controversy amid a Europe-wide debate on overtourism.

Currently, landlords benefiting from short-term rental income can take advantage of a reduced 21% tax on one property, under a scheme introduced by Prime Minister Giorgia Meloni's administration two years ago. The government now seeks to reinstate the standard 26% rate, yet faces stiff resistance from Forza Italia, a coalition partner, and criticism from industry figures.

Forza Italia's Raffaele Nevi criticized the policy as misguided and pointed out that the party was not consulted on the draft. Meanwhile, Economy Minister Giancarlo Giorgetti omitted any mention of the tax changes while unveiling the budget plan, which is set for parliamentary scrutiny and modification before its expected December approval.

(With inputs from agencies.)