ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
See 5.1 Types of Entities Available to Investors to Hold Real Estate Assets regarding the governance principles that apply to REIFs, SIIQs and real estate SICAFs. 5.6 Annual Entity Maintenance and Accounting Compliance The annual entity maintenance and accounting com - pliance costs depend on the number of activities to be carried out. On average, costs range from EUR10,000 to EUR20,000 for both types of company. Auditors’ costs will be added. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time A property lease concerns non-residential properties (eg, office, retail and hotel) and residential properties. Property leases are mainly regulated by the Italian Civil Code, Law No 392/1978 (for non-residential proper - ties) and Law No 431/1998 (for residential properties). The Tenancy Law on non-residential properties was amended on 11 November 2014, allowing the par - ties to freely negotiate the terms and conditions of a lease if the lease provides for an annual rent exceed - ing EUR250,000 and the building lacks historical value (so-called large leases). Business Leases A business lease covers a “going concern” or a busi - ness ( ramo d’azienda or azienda ) that might include a property. In this case, the lease is governed solely by certain provisions of the Italian Civil Code, so the parties are granted freedom to negotiate the terms and conditions of the lease. 6.2 Types of Commercial Leases The Tenancy Law regulates leases concerning offices, retail properties and hotels. Italian law recognises: • property leases; and • business leases. Property Leases
sisting of the exemption of business income from leasing activities from IRES of 24% and regional tax on business activities of approximately 3.9%. How - ever, taxation occurs at the investor level, with the SIIQ obligated to make periodic distributions. On the other hand, income from activities other than real estate remains subject to ordinary income taxation for the SIIQ. The option for this regime can also be exercised by unlisted joint stock companies that are primarily engaged in real estate leasing activities and in which a SIIQ owns a certain percentage of participation in profits and voting rights (ie, more than 50%). For foreign investors, this regime is available through the establishment of a branch in Italy, which may opt for the SIIQ regime if certain requirements are met. There are currently only a few SIIQs in Italy and the number has actually decreased in recent years. 5.4 Minimum Capital Requirement The minimum capital required is EUR10,000 (or EUR1 under certain conditions) for limited liability compa - nies and EUR50,000 for joint stock companies. The minimum share capital for SGRs, as set by the Bank of Italy, is EUR1 million, even though SGRs with reduced capital (not lower than EUR50,000) are allowed under certain circumstances. The minimum share capital for real estate SICAFs is also EUR1 million and the minimum capital is reduced to EUR500,000 for real estate SICAFs reserved for professional investors. For real estate SICAFs entirely managed by external managers, the minimum capital is EUR50,000. 5.5 Applicable Governance Requirements A limited liability company is characterised by great - er flexibility and quotaholders have wider autonomy in shaping the company according to their needs through the provision of different rules within the by- laws, while a joint stock company is governed by a large number of mandatory provisions.
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