Ita

Contracts & tax benefits

Understanding the different types of rental contracts, their features, and potential tax benefits under the standard tax system can help landlords make a more informed choice—selecting the option that best fits their needs in terms of duration and affordability.
We also recommend reading the section “Tax regime” to get a clearer overview of the most suitable and cost-effective contract from a tax perspective.

Rental contracts can be:

  • Open-market rental contract;
  • Agreed rent contract.

 

OPEN-MARKET RENTAL CONTRACT art. 2 paragraph 1 L. 431/98

This type of rental contract has a duration of 4 years, with an automatic renewal for a further 4 years.

The rent is freely agreed between the landlord and the tenant, without fixed limits.
However, the contract includes minimum duration requirements: it must last at least four years, with automatic renewal for another four years unless notice is given.

At the end of the initial four-year period, the landlord can choose not to renew the contract, but only for specific reasons предусмотр by Article 3 of Italian Law 431/98, and with at least 6 months’ notice before the contract expires.

The tenant, on the other hand, can terminate the contract at any time for justified reasons, giving notice of between 2 and 6 months, depending on the terms agreed in the contract.

This type of contract does not offer tax benefits for the landlord.

 

AGREED RENTAL CONTRACT (regulated contracts)

Owners of residential properties can choose to sign agreed rent contracts, where the rent is set according to local agreements between landlord and tenant associations. These contracts come with specific tax benefits.

They follow standard contract templates, with many terms predefined and mandatory, as established by the Italian Ministry of Infrastructure and Transport (Decree of 16 January 2017).

The rent is calculated based on parameters defined in the local Territorial Agreement between landlord and tenant associations. Factors that may influence the rent include features such as the presence of a lift, garden, multiple bathrooms, double glazing, security door, and the location of the property.

In Bologna, the current Territorial Agreement—signed by local landlord and tenant organisations—came into effect on 1 April 2024 and will remain valid until 31 March 2027, or until a new agreement is introduced.

All agreed rent contracts must be certified by one of the associations that signed the Territorial Agreement. This certification confirms that the contract complies with local regulations and is required in order to access tax benefits.

Below are the main features of the three types of agreed rent contracts:

 

AGREED RENTAL CONTRACT

(Art. 2, para. 3, L. 431/98)

Annex A - Ministerial Decree 16/01/20217 or standard template provided by landlord and tenant associations under the Territorial Agreement

  • DURATION
    This type of contract lasts for 3 years, with an automatic renewal for a further 2 years.

At the first expiry date, the landlord may choose not to renew the contract, but only for specific, justified reasons (the same as those required for open-market contracts), and must give at least 6 months’ notice.

The tenant can terminate the contract at any time, by giving between 3 and 6 months’ notice, depending on the terms set out in the contract.

  • TAX BENEFITS

Income tax (IRPEF):
The taxable income is reduced to 65% of the rent, compared to the standard 95%, resulting in a tax advantage for the landlord.

Registration tax:
The taxable base used to calculate the registration tax is reduced by 30%, providing a benefit for both landlord and tenant.

Property tax (IMU):
The tax, calculated based on the rate set by the local municipality, is reduced to 75% of the standard amount.

 

TRANSITIONAL CONTRACT FOR UNIVERSITY STUDENTS - Art. 5, paragraph 3, L.431/98

Annex C - Ministerial Decree 16/01/20217 or standard template provided by landlord and tenant associations under the Territorial Agreement

To use this type of contract, two conditions must be met:

  • The property must be located in a municipality where a university (or branch campus) is based, or in a nearby municipality;
  • The student must have their official residence in a different municipality from the one where they are studying.
  • DURATION
    The contract duration ranges from a minimum of 6 months to a maximum of 3 years, with the possibility of renewal for the same period.
    At the first expiry date, only the tenant can choose to terminate the contract, by giving between 1 and 3 months’ notice, depending on the terms agreed. If no notice is given, the contract is automatically renewed.
    At the end of the renewal period, the contract expires, and a new agreement must be signed if the tenant wishes to continue the stay.
  • TAX BENEFITS
    If the contract is drafted using the official standard template, it qualifies for the same tax benefits as agreed rent contracts.

 

STANDARD TRANSITIONAL CONTRACT - Art. 5, para. 1, L. 431/98

Annex B- Ministerial Decree 16/01/20217 or standard template provided by landlord and tenant associations under the Territorial Agreement

This type of contract can only be used for specific temporary needs of either the landlord or the tenant. These reasons must be clearly stated in the contract and supported by appropriate documentation attached to it. Only the cases defined in the Territorial Agreement between local landlord and tenant associations are valid.

According to the Territorial Agreement of the Municipality of Bologna, examples of temporary needs for the landlord may include: the intention to use the property for personal purposes (or for family members), or the need to carry out renovation works that are incompatible with the property being occupied.

For tenants, examples of temporary needs may include: a fixed-term job in a different municipality from their place of residence, a temporary job relocation, or situations where their main home becomes temporarily uninhabitable.
In all cases, the temporary nature of the situation must be clearly documented and justified.

  • DURATION
    The contract duration ranges from a minimum of 1 month to a maximum of 18 months. At the end of this period, the contract automatically expires, with no need for notice of termination.

The tenant has the right to terminate the contract early for serious reasons, by giving notice in line with the terms agreed in the contract. This option is not available to the landlord.

  • TAX BENEFITS

Registration tax:
The taxable base used to calculate the registration tax is reduced by 30%, meaning that only 70% of the annual rent is considered for tax purposes.

Property tax (IMU):
The tax, calculated based on the rate set by the local municipality, is reduced to 75% of the standard amount.