A “maxi-amendment” has been approved by The Italian Senate on November 26 by means of a confidence vote completely replacing the proposals initially made by the Government in its draft 2014 Budget in October. The changes made to the Government’s so-called “Stability Law” which mainly related to residential and industrial local property taxes and individual income tax deductions.

The controversial local property tax (IMU) on first residences has been abolished from January 1, 2014. The new “service tax” now will be known as the unified local tax (IUC) rather than TRISE. Unified local tax will be created of IMU the levied on all property owned except for first non-luxury residences, TASI which known as a tax on general local services paid by all property owners, with 10 percent to 30 percent payable by lessees and TARI which known as the current local tax on environmental and waste services, levied on either the property owner or lessee. The total rate of IMU plus TASI cannot be greater than 1.06 percent of a property’s value.

While IMU on first residences is being omitted the tax which will survive beyond this year and remain payable on all other real estate including luxury and second houses and commercial and industrial properties. In the case of all other properties the IUC will act as an additional tax to their remaining IMU payments.

There will be an increase of 30 percent for the deductibility of IMU for businesses against both federal and local corporate income tax in 2014. It is forecasted that in the succeeding two years the deduction will fall to 20 percent.