The decree on tax simplification, approved by the Italian government and being published in the Official Gazette, has partially modified the recent discipline of tax imposed on property located abroad.

This tax is payable at a rate of 0.76% on the value of real estate located abroad, for any use by individuals residing in Italian territory. The taxable amount is the cost resulting from the deed of purchase or, failing that, the market value of the place where it is located.

The decree provides, on this subject, the following changes:

a) The tax is not payable if the amount does not exceed EUR 200

b) If the property is situated in countries belonging to the EU or in the country joining the European Economic Area (EEA), which ensure an adequate exchange of information, the tax base is used in the foreign country to fulfill any tax on property or transfer. Only in the absence of these parameters can be used to enhance the policy referred to above.

c) In order to avoid double taxation, tax credit system is available and equal to wealth or income taxes which are levied on the same property.

d) for those who work abroad on behalf of the Italian State or its political or administrative articulation and for those working outside the country to international organizations to which Italy is a member, the tax is applied at a rate reduced by 0.4%, limited period of time in which the activity is actually performed abroad.

If the housing unit is used as a primary residence, the taxpayer can deduct a maximum of 200 euros. For the tax years 2012 and 2013, the deduction is increased to 50 euros for each child aged under 26 who dwell permanently into real estate, with a maximum of 400 euros.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.