ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
In some cases, it is possible to spread the liabil - ity for tax on capital gains over a period of five years. In a sale of the participation into an Italian vehi - cle, the capital gain is subject to Italian income tax at a rate of 26%. Capital gains from the sale of real estate directly owned by a foreign investor without a perma - nent establishment in Italy are not subject to IRES if the property is sold more than five years after its acquisition. If the sale occurs within five years, IRES applies at a rate of 24%. The taxable income is represented by the difference between the price agreed for the sale of the property and its acquisition cost. Starting from 1 January 2023, Italy introduced a so-called property-rich companies rule, in line with the OECD Model Tax Convention, which
regards capital gains realised by foreign inves - tors from the direct or indirect sale of a partici - pation in an Italian vehicle owning certain real estate assets. Such gains may be subject to Italian income tax, including in case of the sale of participations in a foreign vehicle owning a participation in an Italian real estate company. Financial transactions tax (Tobin Tax) is payable (at a rate of 0.2% on the agreed price) by the purchaser of shares in an Italian resident joint stock company, even if the purchaser and the seller are not Italian residents. 8.5 Tax Benefits Italian corporate vehicles are allowed to deduct real estate depreciation and interest on real estate financing, while direct investment from abroad is not eligible for any deduction. No benefits are allowed for residential real estate properties that are rented by Italian companies.
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