Italy drops plans to scrap a tax break for short-term rentals

By Alvise Armellini and Giuseppe Fonte

ROME (Reuters) -Italy's ruling parties have dropped plans to scrap a tax break on short-term rentals as part of amendments to the 2026-2028 budget, lawmakers said on Thursday.

Short-term rentals, often listed on online platforms such as Airbnb, are common in tourist hotspots such as Italy, but are politically sensitive amid Europe-wide protests over overtourism and soaring rents.

The proposed tax change was intended to encourage landlords to rent to long-term residents rather than tourists, but faced opposition from coalition partners, the League and Forza Italia, allies of conservative Prime Minister Giorgia Meloni.

Landlords will continue to benefit from a reduced tax rate of 21% on income from one short-term rental property, instead of the standard 26%.

Marco Celani, head of short-term rentals association Aigab, which had lobbied against the tax hike, saying it would have penalised mostly middle-class homeowners and encouraged tax evasion, welcomed the decision.

"The fact that they have understood that it was not a good idea is good news," he told Reuters.

HEAVIER TAXES FOR MULTI-PROPERTY OWNERS

The measure was cancelled after Meloni held high-level talks on the budget law on Wednesday with Economy Minister Giancarlo Giorgetti and leaders of ruling coalition parties.

However, ruling parties agreed to lower the threshold at which short-term rental activity must be registered as a business, which carries heavier taxation.

Currently, landlords managing more than four properties fall under this regime; the threshold may be lowered to more than two, lawmakers said.

The 2026-2028 budget, presented in October, is now under parliamentary review and is expected to be approved around the end of December.

Proposed legislation typically undergoes changes during this process.

(Reporting by Giuseppe Fonte and Alvise ArmelliniEditing by Ros Russell and Tomasz Janowski)