Real estate taxation includes tax regimes applicable to physical persons, who undertake buying and selling operations or leasing of real estate items, and to legal entities engaged in economic transactions involving real estate. In Italy, there are precise rules that refer to the taxation of real estate investment companies (REICs), the taxation of real estate funds, as well as the tax regime applicable to the buying and renting of houses.
1. REIC (listed real estate investment company) taxation
The REIC is placed under a special taxation model that envisages the imposition of dividends only upon their distribution to shareholders. Capital gains are subject to ordinary taxation or, at the option of the taxpayer, to a 20% imposition as a substitute of IRES and IRAP (in this case, it is required that the REIC hold the property for at least three years). For VAT purposes, the transfer to a REIC of several leased properties is equivalent to the transfers of business companies and they are therefore excluded from the scope of VAT, but are subject to the application of stamp duties, as well as mortgage and cadastral fixed fees (€ 168.00 each). Special rules are envisaged as to the maintenance of separate accounts for the real estate business.
2. Taxation of Real Estate Funds
The asset management company (Italian acronym SGR) that manages a property fund applies a withholding tax at a rate of 20% by way of advance or by way of final imposition,that, depending on the nature of the income beneficiary, is taken either on the capital gains arising from the participation in the real estate investment fund, subject to the statutory exemptions provided for, or on the difference between the redemption value or liquidation of the shares and of their subscription or acquisition cost.
3. Taxation in cases of buying, selling and leasing property
In case of sale and rental of residential and commercial properties, as well as for the transfer of agricultural land and related appliances, the following taxes apply according to established modalities, rates and detailed amounts: a) the registration fee; b) the value added tax (VAT); c) the mortgage and land taxes.
The registration fee is configured to be of three different types: a) primary (collected by the Income Revenue Agency at the time of registration); b) supplementary (required by the Income Revenue Agency following an error in the liquidation of the imposition); c) complementary (required by the Income Revenue Agency on the basis of adjustments in the declared value). The registration fee is applicable to instrumental acts subject to registration and to those voluntarily submitted for registration and, according to established rules, as a percentage of the declared value or on a fixed amount basis.
The value added tax (VAT) applies to the transfer of supplies or goods and to services performed in the country of activity in the exercise of trades and professions, and on imports effected by anybody involved in such activities. The VAT applies, as appropriate, always on a percentage basis.
The mortgage tax is applicable in case of transcription, registration, renewal and remark made in public property registers, while the cadastral tax is due on documents relating to the transfer of property or the creation or transfer of real estate property rights. Both taxes apply on a percentage basis either to the cadastral value (in case of transfer of real estate property via inter vivos acts vis-à-vis private individuals or private entities operating under VAT exemption, or in case of mortis causa inheritance), or to the value of the transferred asset/right and the real value stated in the instrument of transfer (in cases other than those for which it is imposed on the cadastral value) or in terms of a fixed fee.
L. 27 dicembre 2006, n. 296.
L. 24 dicembre 2007, n. 244.
Decision by the Director of the Income Revenue Agency 28.11.2007.
D.M. 24 maggio 1999 n. 228.
D.M. 14 ottobre 2005 n. 256.
D.lgs. 24 febbraio 1998 n. 58 and following amendments.
D.L. 25 giugno 2008 n.112 converted, with amendments, from law 6.08.2008 n. 133.
D.L. 25 settembre 2001, n. 351, converted, with amendments, from law 23.11.2001, n. 410.
D.P.R. 26 aprile 1986, n. 131.
D.P.R. 26 ottobre 1972, n. 633.
D.lgs. 31 ottobre 1990 n. 347.
Editor: Alberto Maria SORRENTINO
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