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Tax breaks and subsidies in Sicily

Before making any real estate purchase, you should make sure you have fully understood the tax implications, whether you intend the property to be a holiday home, a permanent residence or a buy-to-let investment.

The great news is that in a wide range of circumstances, you could be entitled to significant tax breaks in Sicily.

tax breaks in sicily

Picture from https://www.beborghi.com/sicilia-3-giorni-nel-trapanese-marsala-mazara-selinunte/

The 2020 Relaunch Decree

With the economic stimulus package (il ‘Decreto Rilancio’) announced in the summer of 2020, the Italian Government has tried to jump-start their economy in the aftermath of Covid-19. Billions of Euros are coming into the country from central EU funds, and Italy is trying to funnel them into intelligent and sustainable pathways.

Offering subsidies for external investment in the property market was a path strongly endorsed by economists and accepted by the Government. By deploying this colossal public spend to attract overseas money to Italy, the boost to the sectors of design and construction are doubled.

The generous subsidies don’t just boost the economy, they also help protect the environment and are extremely helpful in the fight against the black market economy. They require regular invoices to be produced from by all the workers/construction businesses involved in the renovation work. The ‘black’ economy may bring slightly cheaper labour costs, but homeowners are exposing themselves to the risks of work which is not be covered by guarantee.

So the bonus system helps give Italy leverage in its fight for higher safety standards, for energy efficient homes and against undeclared work. These schemes reward licensed suppliers, their customers who enjoy the tax breaks in Sicily and the planet itself… everybody wins!

The legislation is complex, and we urge our clients to seek specialist financial advice (we know several tax consultants who are already helping developers take advantage of this unique opportunity, and would be delighted to introduce you to them) but here is an overview:

Ecobonus 110 and Sismabonus 110

Ecobonus 110 and Sismabonus 110 are the evolution of the Ecobonus and Sismabonus (‘Sisma’ refers to earthquake-proofing measures) which are already on offer. These comprise the ‘Super Bonus 110’ package.

The difference from last year’s versions lies in the contribution offered by the State, which, as the name suggests, now stands at 110% of the cost of all work (to be completed by 31 December 2021). That’s right – astonishingly, you can now receive more than the cost of the work you’re doing on your property in subsidies! Too good to be true? Not if you can meet some simple criteria and act fast.

 

What’s Included?

Here are some of the renovations and investments which will be covered by Ecobonus 110 and Sismabonus 110. This is not an exhaustive list – please talk to us if you would like to know more!

✔︎ Thermal cladding
✔︎ Energy efficient air conditioning systems (for heating and cooling), both new and replacement
✔︎ Solar panels, heaters and Photovoltaic systems
✔︎ Replacement windows and doors
✔︎ Stations and installations for charging electric cars
✔︎ Seismic safety compliance

Then there are a secondary series of covered home improvements which are knock-on effects to those described above. Say, for example, you have installed an eco-friendly under-floor heating system, but in doing so you have had to tear up the floor. Great news – your new or restored flooring work will be covered by Ecobonus 110.

 

The Small Print

The only applies to improvements to existing buildings (not new construction). In order to qualify for the Ecobonus subsidy you will need to demonstrate that the proposed works will upgrade the energy class of the building by at least two levels. There are some spending limits which are a bit lengthy to explain here but rest assured, are more than adequate for any scale. Incredibly, it is realistic to plan on undertaking all of the renovations outlined above at almost ZERO cost.

The bonus can go to anyone, regardless of nationality (you don’t need to be Italian), or country of permanent residence.

 

I’m sold! How do I apply?

You can get hold of these bonuses in two different ways:

1) With advance payment: If you pay full price for the work up front, you can then claim tax credits to the full bonus amount over a five year period.

e.g. With €100,000 of home improvements, the bonus is €110,000, paid as €22,000 of tax relief every year for five years.

However, tax breaks in Sicily won’t help if you’re not resident here or paying enough taxes to reclaim them all. But the great news is that if you are not planning to become a permanent resident of Sicily (or if you prefer to get a discount immediately) you can also transfer these tax rebates to a bank

2) Invoice discount: a bank advances the expenses and then invoices the State for the reimbursement over the five year period. The perfect solution for foreigners.

Tax breaks for overseas pensioners

Pensioners from other countries can enjoy significant tax breaks in Sicily! If you become domiciled and legally resident here, you will benefit from a flat-rate 7% income tax for the next 6 years.

This intervention is aimed to make the South of Italy in general, and its small towns and villages in particular, an attractive retirement destination for people – especially those arriving from overseas, bringing investment to their new homes and area.

You can find a trustworthy discussion of the relevant law here.

Now that you understand all the financial incentives in play, it’s time to discover how to buy a house in Sicily.

Renovate your Property in Sicily

If you’re thinking of renovating your property, we really do recommend that you find a reputable team to assist you in the work. Trustworthy builders, electricians, plumbers and painters are worth their weight in gold. Even more important is finding an architect who’s capable of guiding this team and transform your ideas into reality. The other value of a good architect is that they will make sure that all the requisite paperwork is complete and accurate, making sure you qualify for all these subsidies.

If you are interested, we are happy to share our experiences with workers and professionals. Some of our partners do also speak English. Chloé Pierron, for instance is a young architect from Paris. She moved to Sicily in 2014 and has worked since then as an architect in Sicily. She is not only trustful and an easygoing young professional, she is also an example how how foreigners can move to Sicily and do great things.

RENOVATE YOUR PROPERTY IN SICILY

If you’re thinking of renovating your property, we really do recommend that you find a reputable team to assist you in the work. Trustworthy builders, electricians, plumbers and painters are worth their weight in gold. Even more important is finding an architect who’s capable of guiding this team and transform your ideas into reality. The other value of a good architect is that they will make sure that all the requisite paperwork is complete and accurate, making sure you qualify for all these subsidies.

If you are interested, we are happy to share our experiences with workers and professionals. Some of our partners do also speak english. Chloé Pierron for instance is a young architect from Paris. She moved to Sicily in 2014 and has worked since then as an architect in Sicily. She is not only trustful and an easygoing young professional, she is also an example that foreigners can move to Sicily and do great stuff.

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