Tax Changes in Italy: Banks, Insurance, and Short-Term Rentals

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Italy is preparing a package of tax changes aimed at increasing budget revenues in 2026–2028. The government of Giorgia Meloni plans to raise levies on financial transactions and insurance premiums, as well as adjust the regulatory framework for the short-term rental market, according to parliamentary documents reviewed by Reuters.

Italy is preparing a package of tax changes aimed at increasing budget revenues in 2026–2028. The government of Giorgia Meloni plans to raise levies on financial transactions and insurance premiums, as well as adjust the regulatory framework for the short-term rental market, according to parliamentary documents reviewed by Reuters.

A key element will be the doubling of the financial transaction tax. The rate will rise to 0.4% from 0.2% for trades on unregulated markets and to 0.2% from 0.1% on regulated venues. The measure applies to transactions in shares and other financial instruments. According to government estimates, it will bring an additional €337 million to the budget as early as next year.



A separate tightening will affect the compulsory motor third-party liability insurance segment. The tax on insurance premiums under MTPL is planned to increase to 12.5% from the current 2.5%. This is one of the sharpest targeted increases in the package and signals the government’s intention to seek additional revenues outside traditional income taxes. The banking sector will also face further constraints. Authorities intend to narrow the scope for using accumulated losses from previous years to reduce the current tax base, effectively increasing the tax burden on banks.

Amid discussions over rising rental rates and overtourism, the government has dropped a previously debated proposal to abolish the tax benefit for short-term rentals. Owners will still be able to pay a reduced 21% rate on income from renting out one property instead of the standard 26%. At the same time, the threshold at which such activity is classified as a business is being lowered: from five properties to three. This implies stricter taxation and additional requirements for owners of multiple properties.



Italy is also considering changes to the so-called flat tax regime for wealthy foreign residents. The 2026 budget proposal suggests increasing the annual fixed tax from €200,000 to €300,000 to boost fiscal revenues, although the measure remains controversial.

Italy’s overall tax burden has already increased significantly in recent years. According to the national statistics agency Istat, total taxes and social contributions in 2024 amounted to around 42.6% of GDP, up 1.2 percentage points from 2023, one of the highest levels among OECD countries.

Under government forecasts, the burden by the end of 2025 will increase to 42.8% of GDP. The new package confirms Rome’s course toward targeted tax increases in the financial and service sectors without a radical overhaul of the core tax system—at least for now. The government had previously pledged to ease the burden, but the official draft budget for 2025–2027 shows it remaining at around 42.3% of GDP, above earlier estimates. Critics note that these parameters reflect a retreat from pre-election promises to cut taxes for the middle class and businesses. The European Central Bank has warned that some of Italy’s budget initiatives, including tax changes and restrictions on banks, could weaken banking system liquidity and negatively affect lending.



Analysts at International Investment note that the new package of measures reinforces the Giorgia Meloni government’s strategy of selectively increasing budget revenues through the financial sector, capital transactions, and service-related income. This approach avoids a direct rise in core taxes for households, but leads to a higher fiscal burden on banks and owners of multiple properties.

For market participants, this translates into reduced predictability of the tax environment in financial transactions, insurance, and short-term rentals, as well as higher costs of operating assets in Italy. In the medium term, such an approach increases regulatory and tax risks for investment, particularly in capital-intensive and service sectors that the state is increasingly viewing as sources of additional fiscal revenue.