ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
5.3 REITs REITs have been implemented in the Italian jurisdiction pursuant to Law 296/2006, as sub - sequently amended. Liquidity and diversification are among the main features of these instruments. The tax regime providing for SIIQs is an optional regime intend - ed for listed joint stock companies whose main activity is real estate leasing and which meet certain financial and equity requirements. This regime provides an advantage for direct tax pur - poses consisting in the exemption of business income from leasing activities from corporate income tax of 24% and regional tax on business activities of approximately 3.9%. However, taxa - tion 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 such regime can also be exer - cised 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%). In case of foreign investors, such regime is available by establishing a branch in Italy which would opt for the SIIQ regime, if certain require - ments are met. There are currently 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 liabil - ity companies, and EUR50,000 for joint stock companies.
Capital gains from the sale of participation in such companies may benefit from the partici - pation exemption regime (effective tax rate of 1.2%) if certain requirements are met. The new property-rich companies rule intro - duced in 2023 should be considered in cross- border investment structure, with reference to the capital gains on the disposal of the participa - tion (exit phase). REIFs and Real Estate SICAFs are exempt from corporate income tax and regional tax on pro - ductive activities. Regional tax on productive activities may apply to SICAFs in limited cases. Investors in REIFs and Real Estate SICAFs may benefit from a withholding tax exemption on profits distributed by the REIF/Real Estate SICAF if certain requirements are met: for example, in case of foreign pension funds or foreign invest - ment funds having certain features (both in case of direct or indirect investment into REIFs and Real Estate SICAFs). Generally, foreign investors may also benefit from a tax exemption on capital gains from the sale of participation in REIFs and Real Estate SICAFs. The Real Estate Securitisation Vehicle is not sub - ject to corporate income tax or regional tax on productive activities on the profits realised dur - ing the securitisation transaction since it does not own such profits for tax purposes. This is because the profits must be used for the repay - ment of the notes issued by the vehicle for the financing of the property acquisition. The non-resident noteholders may benefit from a withholding tax exemption on proceeds paid under the notes.
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