Taxation on loans, what it is, when it applies and rates

Buying a house involves, in most cases, the need to stipulate a mortgage contract.
Indirect taxes are applied to this type of deed, we generally talk about taxation of loans, but how much is it? Can concessions be obtained? How it is calculated.
Here's everything you need to know about the finance tax.
Presidential Decree 601 of 1973, in articles 15 to 20bis, provides for the regulation of the taxation of medium and long-term financing; in these cases, instead of the ordinary regulation, the substitute tax on financing is applied.
Substitute taxation is applied in place of indirect taxes, i.e.
registration, stamp duty, mortgage and cadastral taxes and the tax on government concessions (article 17 of Presidential Decree 601 of 1973).
The replacement regulation was introduced for the first time in 1973 and over time it has undergone several changes which concerned the rate applied, the necessary obligations, the subjective and objective scope of the tax.
Taxation on loans, what it is, when it applies and rates Scope of taxation on loans The taxable base of the tax on loans and rate Joint first home mortgage, how the tax on loans is applied Scope of taxation on loans The first thing to determining in order to understand the scope of application of the tax on financing is precisely the concept of financing, in this case it is necessary to refer to the notion given by jurisprudence.
The Court of Cassation in sentence 4611 of 29 March 2002 defines financing as having financial availability, i.e.
the possibility of drawing money, at any time it is necessary, on the basis of a commitment to this effect undertaken by the credit institution, with obligation to repay within the (medium or long) term contractually envisaged.
Consequently, the opening of credit in a current account also falls within the scope of application, while any operation that does not lead to an increase in economic availability is excluded from the concept of financing, for example For example, a payment extension granted by a bank is not considered a loan and therefore the substitute tax on loans does not apply.
However, loans contracted for the purpose of repaying previous debt exposures fall into this field.
The tax on loans based on article 15 of Presidential Decree 601/1973 applies to: medium and long-term loans (i.e.
whose contractual duration is established as more than 18 months) carried out by banks (article 15, Presidential Decree 601/ 1973); financing of systems, works, networks and equipment intended for public utility initiatives carried out by Cassa Depositi e Prestiti Spa; financing of any duration, carried out in compliance with legislative, statutory or administrative provisions by banks in the sectors of credit for Italian work abroad, credit for crafts, cinema credit, theater credit, refinancing credit and credit operating fishing vessel; to guarantees given in relation to structured financing operations such as issues of bonds or securities similar to bonds, subscribed by anyone, to their possible subrogations, replacements, postponements, splits and even partial cancellations, including credit assignments stipulated in relation to the same , as well as transfers of guarantees also resulting from the transfer of the aforementioned obligations, as well as the modification or extinction of such operations; to mortgage operations for the purchase of homes carried out by bodies, institutions, funds and social security funds towards their employees and members.
In this case the substitute tax can also be applied in the case of loans granted for the construction of homes.
The tax base of the tax on loans and rate The option for the application of the substitute tax must be exercised in writing in the deed of financing.
Article 18 of Presidential Decree 601 of 1973 determines the tax base and dictates the rates to be applied for taxation on loans.
The taxable base of the loan tax is represented by the total amount of loans disbursed in each financial year.
In the case of credit lines, the taxable base is represented by the amount of the credit line.
In the case of structured financing, such as issues of bonds or similar securities, the taxable base corresponds to the amount of the bonds placed.
The ordinary rate of tax on loans is 0.25% (article 18, paragraph 1, Presidential Decree 601/1973, as amended by art.
10, paragraph 2–bis, Legislative Decree 14 March 1988, no.
70).
In the event that the loan is granted in favor of independent public housing institutes or building cooperatives, the rate is halved to 0.125% (article 19 of Presidential Decree 601/1973, paragraph 3).
For export financing lasting more than 18 months, a rate of 0.05% applies.
For the purchase, construction or renovation of properties for residential use and related appurtenances, for which the conditions for the "first home" relief are met and a specific declaration is made, the rate of 0.25% is applied.
The same rises to 2% in other cases (art.18, paragraph 3, Presidential Decree 601/1973).
Joint first home loan, how the loan tax is applied If the first home loan is jointly held, in order for the reduced rate of 0.25% to be applied it is necessary that all joint holders meet the requirements set out from time to time by the norms.
Otherwise, the reduced rate is applied to the portion of the loan of the person who meets the requirements.
For example, if the mortgage is 50% jointly owned by a person who meets the requirements, for example under 36 with an ISEE income of less than 40,000 euros and to another person who does not meet the requirements (for example, has passed the 36th year of age), the 0.25% rate applies only to half of the loan, the 2% rate applies to the other half.
read also Joint mortgage under 36, reduced tax breaks In the event of forfeiture of the benefits provided for the purchase of the first home, the Revenue Agency, through competent local offices, will recover the sums deriving from the relief obtained.
Recovery must take place within the 3-year deadline from the occurrence of the event that leads to the forfeiture of the benefit.
In this case, an administrative fine equal to 30% of the difference between what was paid and what is due is also applied.
If the financed entity decides to replace its mortgage, the new loan is exempt from substitute tax and substituted indirect taxes (registration tax, stamp duty, mortgage and land registry taxes and taxes on government concessions).
The declaration on the substitute tax on loans must be made by the institution that provides the loan/mortgage.
These subjects must submit declarations every six months with an indication of the operations carried out for each half of the year.
read also Mortgage and rent bonus of 2,000 euros arriving in 2024, who is entitled to it and how to request it