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Taxes on short term lettings in Italy The property rented in Italy owned by a non-resident is subject to taxation in Italy. Rental income can be subject to ordinary IRPEF taxation. Or, optionally, taxed with a dry coupon (Cedulare Secca). Taxing rental income to IRPEF means making this income (together with any other taxable income in Italy of the foreign owner of the property) a taxable income. Taxable income that will then be subject to tax according to the various brackets (remember that the first bracket of income has a rate of 23%). In practice, assuming that the owner has no other income to tax to IRPEF in Italy, a rental income of €. 10,000 per year, will be taxed for €. 9,500 (5%, recollection is considered a flat-rate deduction), at a rate of 23%. Instead of ordinary IRPEF taxation, the subject can choose to apply the substitute taxation of the Dry Coupon (Cedulare Secca). The dry coupon is a substitute tax for personal income tax. By choosing this method of taxation, the owner gets taxed 100% of the rental income in Italy, but at a lower rate than the personal income tax(IRPEF)and that is 21%.