ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
8. Tax 8.1 VAT and Sales Tax See 2.10 Taxes Applicable to a Transaction . 8.2 Mitigation of Tax Liability Where non-residential real assets are purchased by a REIF or a SIIQ, the applicable cadastral tax and mortgage tax are halved to 0.5% and 1.5%, respectively. The contribution of multiple real assets, primarily leased, performed by a VAT-registered entity to a REIF or SIIQ is not subject to VAT. Instead, it is subject to fixed cadastral tax, mortgage tax, and stamp duty. 8.3 Municipal Taxes An owner of real property is generally liable for the payment of the local property tax ( Imposta Municipale Unica , IMU). The taxable basis is equal to the cadastral income (including a 5% increase), multiplied by a figure depending on the kind of property. Each year the local municipality approves the rates (from 0% to 1.14%). The user of a property is also subject to the waste removal tax ( tassa sui rifiuti, TARI). 8.4 Income Tax Withholding for Foreign Investors An investor may derive lease income from owned real properties, either directly or by means of dividends or distributions made by a corporate vehicle or fund. Tax on rental income may vary substantially, depending on the structure of the investment. Where the property is held by an Italian corpo - rate vehicle, if the real estate is leased to ten -
feasibility of the project, the construction agree - ment usually includes proper representations and warranties. Contractors are even required to deliver performance bonds. 7.4 Management of Schedule-Related Risk Construction agreements usually provide for penalties to be paid in case of delay. 7.5 Additional Forms of Security to Guarantee a Contractor’s Performance Contractors are required to deliver a perfor - mance bond and, upon completion of the works, to give a warranty bond and a ten-year insurance policy ( decennale postuma ) covering material defects of the building. 7.6 Liens or Encumbrances in the Event of Non-payment In case of a landlord’s default, there might be a possibility for contractors/designers to encum - ber the property and enforce the sale in order to recover their outstanding debts. This would imply a judicial proceeding in court. 7.7 Requirements Before Use or Inhabitation The law requires buildings to be fit for use before they can be inhabited. According to the regulations currently in force, the fitness for use is self-declared by the devel - oper through a certified technical assessment using a specific form, which confirms that the works comply with the submitted project and the regulations on hygiene, health and safety, plants and systems, and fire prevention.
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