ITALY Law and Practice Contributed by: Guido Alberto Inzaghi, Ivana Magistrelli, Silvia Gnocco and Gabriele Paladini, SI – Studio Inzaghi
on the profits realised during the securitisation transaction as it does not own the profits for tax purposes. This is because the profits must be used for the repayment 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. 5.3 REITs REITs have been implemented in the Italian juris - diction pursuant to Law No 296/2006 (as subse - quently amended). Liquidity and diversification are among the main features of these instruments. The tax regime for SIIQs provides an advantage for direct tax purposes consisting in the exemption of busi - ness income from leasing activities from IRES of 24% and regional tax on business activities of approximately 3.9%. However, taxation 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 this regime can also be exercised by unlisted joint stock companies that are pri - marily 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 the case of foreign investors, this regime is available by establishing a branch in Italy which will opt for the SIIQ regime, if certain require - ments are met.
There are currently only a 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. The minimum share capital for SGRs, as set by the Bank of Italy, is EUR1 million, even though SGRs with reduced capital (not lower than EUR50,000) are allowed under certain circum - stances. The minimum share capital for real estate SICAFs is also EUR1 million and the minimum capital is reduced to EUR500,000 for real estate SICAFs reserved to professional investors. For real estate SICAFs entirely managed by external managers, the minimum capital is EUR50,000. 5.5 Applicable Governance Requirements A limited liability company is characterised by greater flexibility and quotaholders have wider autonomy in shaping the company according to their needs through the provision of different rules within the by-laws, while a joint stock com - pany is governed by a large number of manda - tory provisions. See 5.1 Types of Entities Available to Inves- tors to Hold Real Estate Assets regarding the governance principles that apply to REIFs, SIIQs and real estate SICAFs. 5.6 Annual Entity Maintenance and Accounting Compliance The annual entity maintenance and account - ing compliance costs depend on the number of
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