Short-term rentals: when do they become a business?

In recent years, many property owners in Tuscany have turned to non-entrepreneurial short-term rentals as a simple way to generate income from their homes.

A flexible solution, often perceived as straightforward and easy to manage. However, the line between “private” activity and business activity has become much thinner than it may seem.  A recent ruling from the Florence Tax Court brings this issue back into focus.

The Florence case and what it means for property owners

The court examined the case of a property owner who had been renting out a property continuously for over seven years (sentenza n. 148 del 02/03/2026). What mattered was not how the activity had been formally defined, but how it was actually carried out. In this case, the number of bookings was particularly high, the property was consistently on the market, and most importantly, the rental income represented the owner’s main source of revenue. Taken together, these elements led the court to conclude that the activity was being conducted on a regular, organized, and ongoing basis — effectively qualifying it as a business. 

As a result, the flat tax regime was denied.

In simple terms: defining yourself as a private individual is not enough. 

This ruling highlights a key point: substance matters more than form. Even with a single property, a continuous flow of guests, frequent bookings, and an increasingly structured management approach — including cleaning, guest communication, and platform management — may point toward a business activity. At the same time, regulations have become stricter: today, managing more than two properties automatically places you in the business category.  But as this case shows, the threshold is not the only factor.

Legal Note: A Warning Signal, Not a Final Verdict

It is important to clarify that the Florence ruling is a first-instance judgment. This means the taxpayer still has the opportunity to appeal and potentially take the case to the Supreme Court. However, this ruling sets a significant precedent: tax judges are increasingly focusing on the "economic substance" of short-term rentals, looking past the formal labels of "private" or "non-professional" host.

Why it’s important to pay attention.

The real risk is that these situations often come to light after several years, once the activity is already well established.

And when they do, the consequences can be significant: retroactive tax assessments, loss of tax benefits, penalties, and administrative obligations.

If an activity is reclassified as a business, the financial damage goes far beyond losing the preferential tax rate. The owner could face:

VAT Recovery : The VAT that was never applied to previous rental income becomes a direct out-of-pocket cost for the owner.

INPS Social Security Contributions: The retroactive obligation to register with the Social Security "Commercianti" fund, requiring the payment of both fixed and percentage-based contributions.

Fines for Lack of Invoicing: Heavy penalties for failing to issue formal invoices and neglecting mandatory accounting records.

With the full implementation of the CIN (National Identification Code) and the obligation for platforms like Airbnb and Booking.com to share data with the Revenue Agency, "DIY" tax management has become extremely risky. Today, tax authorities use algorithms to cross-reference the number of nights sold with declared income in seconds, making "masked" professional activities easily identifiable.

This is not just about operations — it is about protecting your investment over time. Owning a home in Tuscany and renting it out remains a valuable opportunity.  But today more than ever, it is not just about doing it — it is about doing it properly. 

Every home has its own story, and so does the way it is managed. Understanding the right approach from the beginning is what truly makes a difference over time. If you’d like to better understand how to approach your specific situation, we’d be happy to help. Feel free to get in touch at elisa@tuscanhouses.com