ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
by an Italian listed real estate investment com - pany ( Società di Investimento Immobiliare Quo- tata , SIIQ). The tax authority may verify within two years if the sale price is in line with the fair market value. Generally speaking, VAT can be offset against output VAT, offset against other taxes, or recov - ered through a refund by the tax authority under The sale of residential property by a VAT entity to another VAT entity is generally VAT-exempt, except where: • the seller was also the developer of a new property or is the company that carried out renovation works, 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 from the date when the construction or renovations works are completed; or • the sale and purchase transaction takes place more than five years after the works are completed, and the seller is the developer or entity that performed the renovation works on the real property, and exercises the option to apply VAT; in these circumstances, VAT would be applied under the reverse charge mecha - nism. The following taxes apply on sales of residential properties that are VAT-exempt: • cadastral tax of EUR50; • mortgage tax of EUR50; and certain circumstances. Residential Property • registration tax at 9% of the sale price (the tax authority may verify within two years if the price is in line with the fair market value).
Otherwise, the registration tax, mortgage tax and cadastral tax will each be due at EUR200. The sale of a real property whose VAT was not totally deducted by the seller VAT entity when it purchased the property is always VAT-exempt (and liable to proportional registration, cadastral and mortgage taxes). Typically, the purchaser will pay the transfer tax and the fees for the notary. Brokerage fees typi - cally range from 1% to 3% of the sale price. If the transfer of the asset is the result of the acquisition of the entity that owns the asset, then the transfer transaction is VAT-exempt and a reg - istration tax of EUR200 will be due, regardless of which percentage of ownership in the entity is purchased, and no stamp duty will be due in connection with the transaction. However, a financial transaction tax (also called a Tobin Tax) will be due on a purchase of any number of shares representing the corporate capital of a joint stock company (but not in the case of quotas in a limited liability company or participa - tion in a real estate fund) that is an Italian resi - dent company for tax purposes, regardless of whether the purchaser or the seller is an Italian resident. This financial transaction tax is equal to 0.2% of the sale price. 2.11 Legal Restrictions on Foreign Investors In principle, there are no restrictions on foreign investors acquiring real estate. However, it shall be verified whether or not investors come from countries that are affected by international sanc - tions or where rights are limited or restricted, in which case the so-called reciprocity principle (ie, whether the country of the investor grants a similar right to Italy) or the investment screening regulations at the European level might apply.
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