Yet Another Italian Property Tax? Understanding Urbanisation Fees or “Oneri di Urbanizzazione”

"Oneri di Urbanizzazione" Are Meant to Fund Town Improvements

[Note: this article is one in a series about property tax in Italy. Refer to our main guide for an overview]

The crux of understanding Italian tax revolves around decrypting various fees and contributions, one such being the "oneri di urbanizzazione" or urbanisation fees. Imposed by municipalities, these fees are mandatory for private entities, including builders and property holders, and are meant to reflect the increased land use or a surge in infrastructure and service needs that come from your building project - for instance, the need to build new roads. It does not mean that the funds you disburse actually go to these projects, mind you. In this article, we'll explain what these poorly-known but potentially high fees are, and when do you or do not pay them. Beyond this article, our TAX AI is there to help you with any further queries on the various Italian property taxes.

Delving into urbanisation fees, we understand they are primarily categorised into primary and secondary. The primary urbanisation fees are for the creation of essential services like roads, sewer systems, public lighting, parking facilities and green spaces. Secondary urbanisation fees, on the other hand, cater to important communal facilities including nurseries, schools, sporting arenas and cultural centres.

Urbanisation Fees: The Calculation Process

Local context and specific municipal regulations drive the calculation of urbanisation fees. In practice, they are different in every town. Despite these variances, a general principle exists: the urbanisation fees are typically derived by multiplying the constructed space by the cost per square metre, thereby generating the total due payment towards the execution of urbanisation works.

To demonstrate, imagine a builder erecting a new residential building with a surface area of 500 square metres in a municipality that charges €100 per square meter. The urbanisation fees here would equate to: 500 square meters * €100/square meter, totalling €50,000.

You Should Ask Town Hall For an Estimate Beforehand

Crucially, urbanisation fees calculation is not a rigid process - municipalities enjoy the liberty to customise this formula based on their prevailing needs and priorities. This flexible approach may induce higher costs in areas of exceptional historical or environmental significance or inspire the creation of energy-efficient structures. Additionally, reflecting the dynamism of construction costs, urban policies, or real estate market, urbanisation fees can be updated periodically.

A Crash Course in Urbanisation Fees Payment

Coming to the payment of these urbanisation fees, one can either opt for a one-time payment or choose to installments. The latter goes:

- 50% at the time of the construction permit being issued
- 25% within one year from the reference date
- 25% within two years from the same date

Please note, any instalment payments must be assured through a bank or insurance policy, surrenderable upon the completion of all installments and any accrued interest.

Not Due On Existing Buildings, Unless You Change Their Purpose

The "oneri di urbanizzazione" are charges that apply primarily to new constructions or, significantly, if the usage of a particular section in an existing building is altered. This implies that if you transform a currently non-residential area, such as a granary, into a residential or habitable space, the municipal authorities may require you to pay these charges. This is commonly done to cover the cost of adapting local infrastructure and services to accommodate the changes and additional usage.