ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
costs borne by the public authorities to carry out the remediation works. 2.8 Permitted Uses of Real Estate Under Zoning or Planning Law The permitted use of an asset is set forth in the general town planning scheme of the city but, in the case of existing buildings, the construction history of each asset should also be taken into account, since it could affect the establishment of a specific use. A buyer may ascertain the permitted use under the town planning rules in force by requesting a zoning certificate ( certificato di destinazione urbanistica ), from which it is also possible to dis - cover any urban planning restrictions that apply to the asset. 2.9 Condemnation, Expropriation or Compulsory Purchase Private ownership might be subject to an expro - priation procedure if there is a supervening public interest, such as the realisation of public works or works of public interest. In this event, an indemnification shall be paid to the owner of the property/land. It should be noted that the indemnification is at the market price of the property/land subject to expropriation. 2.10 Taxes Applicable to a Transaction Non-residential Property The sale of a non-residential property by one VAT entity to another VAT entity is generally VAT-exempt, other than in the following circum - stances: • if the seller was also either the developer of a newly constructed property or the entity that carried out renovation works on an existing property, provided that the sale is performed within five years of the date when the con -
struction or renovations works are completed (mandatory VAT); or • when the above requirements are not met, if the seller exercises the option to apply VAT to the sale and purchase transaction, and the exercise of this option is properly set out in the deed providing for the sale and purchase of the real asset. In either of these cases, one of the following two mechanisms will respectively apply: • the ordinary regime in the first case, which provides that the seller must issue an invoice in connection with the sale charging the VAT; or • the reverse charge mechanism in the sec - ond case (ie, when the seller opts for VAT to apply), which provides that the seller will not charge VAT in the invoice, and the purchaser then “writes in” the rate and amount of appli - cable VAT in the invoice, and then registers the invoice and the VAT in its input VAT regis - ter and its output VAT register; consequently, the sale and purchase transaction will be VAT- neutral (and no cash-out for VAT). The applicable VAT rate is either 22% or the reduced rate of 10% if the real property sold underwent material renovation works. The following taxes will be payable in any sale and purchase of non-residential real assets: • cadastral tax at 1% of the sale price; • mortgage tax at 3% of the sale price; and • registration tax of EUR200. Mortgage and cadastral taxes can be reduced to an aggregate 2% rate if one of the parties to the transaction is an Italian real estate invest - ment fund (REIF) or if the property is acquired
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