Booking.com’s 21% Withholding Tax in Italy: What Property Owners & Managers Need to Know

If you own or manage residential property in Italy and use Booking.com to facilitate bookings and payments, it’s essential to understand your changing tax obligations. Beginning January 1, 2025, a new Italian withholding tax system will impact how your rental income is managed and reported—even if Booking.com itself withholds part of your tax at the source.

What’s Changing? Booking.com’s 21% Withholding Tax Process

Starting January 1, 2025, Booking.com will begin withholding a 21% short-term rental withholding tax (ritenuta d’acconto) on payment transactions they process for hosts in Italy. This tax:

• Applies to the total transaction value of reservations for stays of 30 days or fewer where Booking.com collects payment from guests on your behalf.
• Affects property owners and managers of residential properties whose cadastral categories (categorie catastali) are A1 to A11, except A10. (Hotels and similarly classified accommodations are generally excluded.)
• Is withheld by Booking.com directly from payouts as an advance on your annual Italian income tax bill.

Important: Declare Your Property’s Cadastral Category

To ensure the correct application of this rule, by December 31, 2024, all property managers (excluding hotels) must declare their property’s cadastral category via the Booking.com extranet.

Why? This declaration enables Booking.com to determine whether the 21% withholding tax applies to your rental income. Without this declaration, you may face administrative issues or risk incorrect withholding.

Why Filing Your Tax Return Is Still Required

It might seem that having Booking.com withhold tax automatically means you’re done—but that’s not the case. You are always required to file an Italian tax return (dichiarazione dei redditi) to properly declare and reconcile your rental income, for these reasons:

1. Independent Tax Liability: The tax withheld by Booking.com is considered an advance payment—not the final amount owed. As the property owner, you remain responsible for ensuring your taxes are properly calculated and reported.
2. Comprehensive Reporting: Italian tax rules require you to declare all income, even if tax has already been deducted at the source or by an intermediary like Booking.com.
3. Deductions and Credits: By filing, you can claim allowable business expenses, deductions, or credits, potentially reducing your tax burden relative to the flat 21% withholding.
4. Tax Reconciliation: The tax return lets you reconcile withheld amounts with your total tax obligation based on your overall income, residency status, and eligible costs.

Tax Tips for Italian Rental Property Owners Using Booking.com

To stay compliant and maximize your returns, keep these guidelines in mind:

• Keep Detailed Records: Always retain documentation of Booking.com rental payments and specific tax withholdings. This is essential for accurate tax reporting and in case of future audits by the Agenzia delle Entrate (Italian Tax Authority).
• Manage Tourist Taxes Separately: The Tourist tax (tassa di soggiorno) collected from guests is a municipal tax and not considered rental income. For instance, the city of Rome charges between €3-€10 per person per night, depending on accommodation type.
• Understand VAT Implications: If your rental business meets certain thresholds or is structured in particular ways, VAT (IVA) may apply to some transactions. VAT is calculated and reported independently of the 21% withholding.
• Consult a Tax Professional (Commercialista): Italian taxes are complex, and with these changes, expert help is more important than ever. Choose an English-speaking tax expert (such as those at ItalianTaxes.com) experienced with rental property and digital platforms.

Potential Penalties and Non-compliance Risks

Do not assume that the Booking.com withholding is the end of your tax obligations. Failing to file an annual Italian tax return or making incorrect declarations can result in steep penalties, late fees, and prolonged issues with the Agenzia delle Entrate—even if the platform has withheld taxes on your behalf.

Frequently Asked Questions

How do I file taxes in Italy as a non-resident property owner using Booking.com?

As a non-resident earning Italian rental income, you must file an Italian tax return (dichiarazione dei redditi) annually, even if Booking.com withholds the 21% tax. Report all your Italian-source income, reconcile withheld amounts, and claim eligible deductions. Using a digital tax platform, like ItalianTaxes.com, helps streamline the process for non-residents.

Do I need to pay tax on my rental property in Italy if I use Booking.com and they withhold tax?

Yes. The 21% tax withheld by Booking.com is typically an advance payment, not the final tax due. You must still declare the income, assess total tax owed (which may be higher or lower based on your circumstances), and file your tax return to settle your liability.

What is the deadline for filing Italian taxes for property rental income?

The usual deadline for submitting an Italian tax return is by November 30 of the year following the tax year, though this can vary if you’re eligible for simplified filing. For income earned in 2024, the deadline will generally be November 30, 2025.

What happens if I don’t declare my property’s cadastral category to Booking.com by December 31, 2024?

If you fail to provide your property’s cadastral category, Booking.com may be compelled to apply the withholding based on default or incomplete information, leading to incorrect deductions or administrative complications.

Can I file my Italian tax return online from abroad?

Absolutely. With ItalianTaxes.com and similar digital services, you can file and pay Italian taxes from anywhere, in English, with support for non-resident and cross-border taxpayers.

Simplifying Tax Compliance with ItalianTaxes.com

As an Italian property owner or manager leasing via Booking.com, the new 21% withholding tax does not eliminate your annual tax filing obligations. Stay proactive:

• Declare your property’s cadastral category in the Booking.com extranet before December 31, 2024.
• Collect and organize all rental and withholding documentation.
• File your Italian tax return on time, ensuring all income is reported and reconciled.
• Work with ItalianTaxes.com—your trusted online Italian tax platform—for bilingual, expert guidance tailored to expats, foreigners, and non-resident taxpayers. Take the anxiety out of tax filing, stay compliant, and maximize your Italian rental income.

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