ITALIAN TAXES

The rules governing this matter are extremely complex and far beyond the scope of this summary. It is of course essential to seek professional advice. The taxation rules of any country are almost always complex and often challenging to understand.

For the purposes of identification there are two main types of tax linked to real estate conveyances: stamp duty (imposta di registro) (and the related mortgage and cadastral taxes) and VAT (imposta sul valore aggiunto). Whether one tax or the other is applied depends mainly but not exclusively on the nature of the vendor. Stamp duty is applicable in all cases where the vendor is a private non-business party as well as in a few particular cases of sales by companies, in consideration of the kind of asset sold and other specific (e.g. temporal) circumstances. VAT is usually applicable, instead, in particular circumstances, to sales by particular limited companies (e.g. real estate companies and construction companies).


Where a building or renovation company sells a residential property (and its accessories) to a private individual within four years from completion of the works, the conveyance is subject to VAT, which the purchaser pays directly to the company. The purchaser will be responsible for the payment of stamp duty, mortgage and cadastral taxes on a fixed amount; on the other hand, if the sale takes place after four years have elapsed from completion or it is a residential sale by a company that is not in the business of building or renovation, the purchaser will not be responsible for the payment of VAT. He will pay stamp duty, mortgage and cadastral taxes which are usually collected temporarily from the buyer by the Notary on behalf of the government at the moment of the execution of the deed of transfer


Tax Relief for Foreigners on the Purchase of a Primary Residence (Prima Casa)
When the vendor is a company which built (or renovated) the property and four years have not elapsed since completion, the buyer must pay VAT directly to the company and not to the notary. VAT is 4% of the agreed price and must be declared in the sale contract at completion. In order to qualify for primary residence the property being bought must not be a luxury dwelling. There are certain guidelines laid down by the Ministerial Decree of the 2nd August 1969 which stipulate the nature of a luxury dwelling. The buyer must have their official residence in the Municipality where the property is situated or to establish it there within 18 months of completion.

The purchaser would still be able to rent out the house as long as they resided in the municipality.
The buyer is not able to have sole or joint title with one's spouse to rights of ownership, usufruct, use or habitation of another dwelling within the territory of the Municipality where the purchased property is located.
Also the buyer is not to have, anywhere in Italy, title, or even a share in title (i.e. co-ownership of a property purchased with the primary residence benefits) or legal title by way of a common property arrangement with regard to another domestic property purchased anywhere else in Italy taking advantage of the tax relief on primary residences.

Once this tax benefit has been acquired it is not possible to resell the property purchased within five years from the date of completion. Should a buyer wish to sell within this period they would have to pay a sum equal to the difference between the tax paid and the tax that would have been paid for a second home, increased by a surcharge of 30% in addition to interest. Present rules, however, allow the resale of the primary residence without penalty if within one year of the date of sale the seller purchases another property in which to liveIt is all too easy to overlook this important aspect of your new project. It is imperative that you seek specialist tax management advice as failure to do so could result in receiving a far higher tax bill than necessary or, worse still, you find you are in breach of a regulation you were unaware of. Our Financial Tax Management division has considerable knowledge of all areas of tax efficiency and tax compliance. We can advise on the steps needed to manage all aspects of your tax liability, to assist you limit your tax exposure, help you preserve more of your money and plan for the future.
As every individual has unique financial circumstances, the advice given is exclusive to each client and has to provide the best solution for their situation.

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Our fully qualified accountants, tax consultants and financial advisors are committed to the task of developing and maximizing the best use of the resources available.