Italy's 2026 Budget Law locks in the short-term rental tax shake-up — who wins, who loses

Italy’s 2026 Budget Law has been finalized, and after months of political back-and-forth, the country’s short-term rental tax regime has landed in a compromise that partially protects small hosts but materially tightens the rules for anyone operating at scale.

What changed in the final text

The original draft of the 2026–2028 Budget Law proposed a blanket 26% cedolare secca rate on all short-term rental income, effectively eliminating the 21% preferential rate that individual hosts had relied on for years. That proposal did not survive political negotiations within Prime Minister Giorgia Meloni’s coalition — Forza Italia publicly opposed it, with Deputy Prime Minister Antonio Tajani calling it “a mistake that can be corrected.”

The final version of Article 7 of the 2026 Manovra confirms a two-rate structure:

• 21% flat tax on income from the first short-term rental property
• 26% flat tax from the second property onwards
• Business activity presumption from the third property — triggering VAT registration (Partita IVA), social security contributions, and full business accounting

The most consequential change is the business-threshold shift: until 2025, the presumption of entrepreneurial activity kicked in at five or more properties. From 2026, it triggers at three — a meaningful structural tightening for multi-property operators.

Who this hits hardest

Individual small hosts with a single property continue to benefit from the 21% cedolare secca and are essentially unchanged by the reform.

Hosts with two properties pay 21% on one and 26% on the second — this is also unchanged from the 2025 regime.

Hosts managing three or more properties are the biggest losers. They lose access to the flat-tax regime entirely, must register for VAT, adopt business-grade accounting, and pay progressive IRPEF on rental income (or opt into the Regime Forfettario at 5%/15% where eligible). Platforms continue to withhold 21% by default, so multi-property hosts must reconcile the difference through their annual tax return.

The bigger picture

This reform sits on top of an already-tightening compliance stack for Italian STRs:

• CIN (Codice Identificativo Nazionale) is mandatory for all short-term rental listings, with fines ranging from €800 to €8,000 for non-compliance.
• BDSR (Banca Dati Strutture Ricettive) is the national accommodation database underpinning CIN.
• DAC7 requires platforms to report host earnings directly to Italian tax authorities.
• Key box bans and mandatory visual guest verification (see separate coverage) have reshaped check-in operations.

Taken together, Italy’s 2026 regime is a clear push toward market consolidation. The individual host with a single apartment retains their tax advantage. The semi-professional host with 3–5 properties faces a compliance and tax cost step-change that will push many to either professionalize into a limited company or exit. The professional property manager, already operating under corporate tax structures, gains share as the middle of the market gets squeezed.

What operators should do

For operators currently sitting at 3+ properties under individual ownership, the priority actions for 2026 are:

1. Open a Partita IVA and reassess the Regime Forfettario vs. ordinary IRPEF calculation.
2. Confirm CIN codes are active and visible on every listing across Airbnb, Booking.com, and Vrbo.
3. Reconcile platform withholdings against actual tax liability quarterly, not just annually.
4. Model whether incorporating into an SRL changes the overall tax and administrative picture.

The direction of travel is clear: Italy is deliberately pushing its short-term rental market toward a cleaner, more professionalized, more taxable structure — and the transition cost falls squarely on the semi-professional tier.