If you plan to buy a home in Italy and and make money from your property, running a bed and breakfast is an appealing idea. But there are a few things you need to know ahead about Italy’s bed and breakfast industry, which may be slightly different to regulations in your own country.
Should you open a B&B in Italy?
The typical bed and breakfast hotel and guesthouse is a traditional Anglo Saxon business, so very appealing to a wide range of overseas buyers looking to purchase larger home in Italy. There is a growing need for tourist accommodation of this nature, as many holidaymakers prefer the flexibility they gain from staying a few days in different B&Bs or like to book this type of accommodation for a weekend away.
According to the most recent survey carried out by Istat (Italy’s National Institute for Statistics), in the peninsula are about 25,000 B&Bs, with 40,000 people working within the sector.
As a matter of fact we’re noticing a trend lately for overseas home-hunters to buy Italy real estate that can be turned into small B&B business premises, particularly old farmhouses or large properties in one of the many ancient towns and hamlets of the peninsula.
Some examples – Just think at the mesmerizing Civita di Bagnoregio (Lazio region), which is situated on a plateau of volcanic rock overlooking the River Tiber. It has been included in the World Monument’s List of Most Endangered Sites in 2006 due to the erosion of surrounding soil. But Civita di Bagnoregio, also known as “the dying city”, is literally being born again. Up to 642,000 tourists visit it in 2016 and former derelict properties are opening up as tourist shops or B&B premises, many of which run by international investors, to cater for this holiday trade. The town had actually dwindled to a total of just six residents during the 20th century, but the ancient architecture and its peculiar characteristics that make it unique have drawn the tourist industry to the town.
Another example is the mountainous and mediaeval Santo Stefano di Sessanio (Abruzzo region). A magical village built with limestone where time has stood still along with its labyrinth made of narrow streets and archways. After these new activities mushroomed here the village has started to attract new residents again who have renovated many properties by maintaining its original features without putting aside every contemporary comforts. Take a look at this unique and mezmerizing property for sale in Santo Stefano di Sessanio via Gate-Away.com which is part of the famous Sextantio Albergo Diffuso, born thanks to the initiative of the Swedish-Italian entrepreneur Daniele Kihlgren that revived the entire village.
But the list could go on forever.
How to Run a B&B Business in Italy Step by Step
If you are thinking about buying a home in Italy and converting it into a B&B, check out these tips to help you get started. Invest in Italy it’s easier than you might think!
• When you’ve found the best property for sale in Italy that is suited to your ambitions to run a B&B you will need to visit the information office at your local Town Hall (comune), which is called SUAP (Sportello Unico Attività Produttiva), to get an official form to declare your new B&B is starting. It is called SCIA (Segnalazione Certificata di Inizio Attività) and you also can download it from the Internet. Once you have completed this form and returned it to the Town Hall you can officially and immediately start in business as a Italy B&B owner. You will need also to enclose a variety of documents with your SCIA, these vary according to regional legislation but are likely to include a plan of the property, deeds of ownership of the real estate or the rent agreement, your B&B insurance policy, etc. There will also be a fee for processing your SCIA which can range between €30 and €150, depending upon your region.
• Each Italian region has different regulations also regarding the numbers of bedrooms you can let, the size of the rooms, minimum furnishing requirements in all letting bedrooms and so on. So check them out carefully.
• You need to ensure that you adhere to the strict guidelines of your specific area relating to the activity of a B&B and how yours is managed.
This falls into 2 main categories. Firstly how ‘infrequent’ is the service that you are providing? And secondly, how organized is your activity?
Each region has a specific number of days under which you can operate your home as a B&B each year. If you supersede this amount then it is likely that you will be deemed to be running a more organized holiday rental activity and this has tax implications.
1) If you are operating within the local B&B guidelines then your activity will not be considered a ‘serviced’ business activity and therefore you will not have to charge VAT to your guests. The income you generate will only be subject to income tax at your highest marginal rate and would need to be declared once a year on your personal tax return. You can also offset expenses relating ONLY to the B&B activity.
2) If it is deemed to be that you are running your B&B on a more organized basis, e.g. exceeding the maximum number of days per year that rooms can be rented, renting out more rooms than allowed under the rules, advertising your activity as a holiday rental on various websites, providing additional services such as tours or other numerous activities, then you will be considered to be running a serviced business activity. You will then need to charge VAT for your services and open a VAT position in Italy known as a partita IVA. The same income tax rates apply but you also need to make payments to the social security system in Italy through a contribution know as INPS. This is in addition to your income tax (although this is a fully deductible expense from year 2 onwards). All expenses are fully deductible, with evidence of VAT receipts, on this route.
Clearly it is important that you check the local guidelines carefully with a locally based expert before embarking on any activity and ensure that you fall within these rules. The main consideration is to ensure that there is a clear distinction between an organized holiday let and a B&B depending on which activity you prefer to operate.
Gate-Away.com provides you with nearly 25,000 properties for sale in Italy and many of them are suitable for your new Italy B&B business:
[Written in collaboration with Gareth Horsfall from The Spectrum IFA Group, Independent Financial Advisers]
This is an updated article from a previous version published on January 2016.