Income tax on rental business

It does not work the same way as the UK I'm afraid. It is much, much more complicated and you will definitely need an Italian accountant. Your basic assumption is correct but there are various tax regimes that have different tax rates and allowable expenses. Some allow you to deduct IVA and some don't. Each type of business has a code and this governs what regime you can have and the basis for your INPS payments. You will need a Partita IVA (Italian VAT code). Different business codes have different requirements for the payment of INPS (Italian National Insurance) and you may find that you have to pay the minimum INPS contributions (around €3,000) regardless of whether you sell a single thing. There is also the wonderful Studio di Settore, where the taxman checks certain groups of business codes for 3 years and if he thinks you haven't declared enough income will send you a tax bill based on what he thinks you should have invoiced. Nice eh?! You will also need to look into your insurance obligations (especially public liability). All in all, if you can keep your business based in the UK I would recommend it.