ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
6.11 Payment of Property Taxes A local property tax (IMU) is imposed on the owner - ship of the property and calculated on the value of the property as determined under Italian tax provisions. Registration tax is imposed on the lease agreement and calculated on the rent. The IMU will be borne by the landlord according to the tax law. However, landlords and tenants may enter into a triple-net lease agreement under which the rent due from the tenant is calculated based on the IMU pay - able by the landlord. This provision is valid among the parties to the lease agreement, but not before the tax authority. Landlords and tenants are jointly and severally liable before the tax authority for the registration tax on the lease agreement. Where payment is not made, the tax authority may request that both parties to pay the full amount, irrespective of the lease agreement’s clauses regarding splitting the registration tax. Payment by the landlord or tenant settles the tax liability of the other party. According to market practice, in commercial leases, as a rule, the parties each agree to pay 50% of the registration tax and to do so annually. 6.12 Insurance Issues Real estate must be used in line with zoning and plan - ning provisions in Italy. Lease agreements expressly state what the property is to be used for and the ten - ant is not allowed to change the intended use. If they do, the lease will be terminated. 6.13 Restrictions on the Use of Real Estate In Italy, the tenant is usually allowed to alter/improve the property, subject to the landlord’s consent. Upon the expiry of the lease agreement, the landlord may require the tenant to remove all alterations and improvements, or may decide to acquire them free of charge.
6.14 Tenant’s Ability to Alter and Improve Real Estate Law No 392/1978 regulates commercial leases (eg, office, retail and hotel), while Law No 431/1998 regu - lates residential leases. The Italian Civil Code applies to all leases. 6.15 Specific Regulations Landlords are not allowed to terminate lease agree - ments in the event of a tenant’s insolvency. A specific procedure set up by the court-appointed receiver will take place instead. 6.16 Effect of the Tenant’s Insolvency Tenants in Italy usually provide a cash deposit of up to three months’ rent to landlords to secure the latter against the tenant’s failure to meet their obligations. Bank guarantees/insurance policies can cover higher amounts. Corporate guarantees are even delivered by the tenant. 6.17 Right to Occupy After Termination or Expiry of a Lease Under Italian law, upon the expiry date, the tenant will need to vacate the property. Failure to do so may result in holdover indemnities being paid to the land - lord for a specified period. Upon the expiry of this grace period (if agreed), the landlord may seek a court injunction and the restoration of damages. 6.18 Right to Assign a Leasehold Interest In line with current market practice, a tenant may be allowed to assign the lease, subject to the land - lord’s consent. Exceptions might apply to intra-group assignments. A sublease term must not exceed the lease term. These provisions can be freely determined by the par - ties and are subject to negotiations. Italian tenancy law provides that, if a tenant transfers the business along with the lease, the landlord may oppose the transfer only for justified reasons. Longer- term leases can deviate from this provision. 6.19 Right to Terminate a Lease Leases include a specific termination clause listing all events pursuant to which a landlord can demand
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