ITALIAN PROPERTIES
December 2014 | All rights reserved ©Financegroupholding
INVESTING IN CALABRIA 2.0
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December 2014 | All rights reserved ©Financegroupholding
INTRODUCTION ……………………………………………………………………………………………………………………………………………………………………………………………………Page 3
SALES PROCESS .……………………………………………………………………………………………………………………………………………………………………………………………………Page 4
PROPERT DUE DILIGENCE….…………………………………………………………………………………………………………………………………………………………………………………Page 6
INVESTMENT BASICS & TAXATION ………………………………………………………………………………………………………………………………………………………………………Page 8
WHY CALABRIA……………………………………………………………………………………………………………………………………………………………………………………………………Page 15
ASTORIA RESIDENCE……………………………………………………………………………………………………………………………………………………………………………………………Page 16
DISCLAIMER …………..……………………………………………………………………………………………………………………………………………………………………………………………Page 19
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December 2014 | All rights reserved ©Financegroupholding
ITALIAN PROPERTIES
INVESTING IN CALABRIA 2.0
INTRODUCTION
An increasing number of foreigner buyers and
investors have been investing in Italian real
estate, especially in recent years. Italy, indeed,
is recognized worldwide for its impressive
artistic patrimony, beautiful cities, relaxing
vacation destinations, and overall quality of life.
Generally speaking, the Italian real estate
market – both residential and commercial - has
performed strongly over the past few years;
moreover, in recent years Italy has
substantially reformed its legal system in many
fundamental sectors with the explicit purpose of
simplifying its commercial
and
fiscal
legislation and creating an even more
favorable legal and tax environment for
domestic and foreign investments. That being
said, all foreigner buyers/investors (hereinafter
collectively referred to as “buyers”) desiring to
invest in Italy should always seek competent
legal assistance before embarking in any real
estate project; buying a property in Italy,
indeed, may often result in a rather complex
legal process due to specialized procedures
and practical difficulties peculiar to the Italian
market.
The Italian legal system is substantially
different from many overseas countries; real
estate transactions are regulated by the
provisions of the Italian Civil Code (codice
civile) as well as by those of other specific
administrative, environmental, and fiscal laws
and regulations. In general terms, the
purchase and sale of real estate property in
Italy must necessarily occur with the local
assistance of an Italian-based notary (notaio).
The notary is an Italian lawyer and – at the
same time - a public official; his/her role and
functions are substantially (a public official
and, as such, in a position of impartiality
between the seller and the buyer) disconnected
from the role of any independent legal advice
that the buyer should always seek from his/her
personal attorney (avvocato).
indeed, expose the buyer/owner to multiple
legal and tax issues, of Italian,
and
international
law.
A
dually-admitted
Italian/foreign attorney is in the strategic
position to properly advise and guide the
buyer/owner so that all issues arising from the
interaction of the two different legal systems
are effectively taken care of. On behalf of the
buyer, the attorney will coordinate with the
local notary and, depending upon the
complexity of the specific case, interact and
negotiate with the seller and/or the seller’s
attorney.
In addition, the attorney will assist the buyer in
all those issues that are usually intimately
related to the Italian real estate investment
itself, such as:
-
Domestic/international tax and
planning;
Italian immigration procedures etc.
estate
Purchasing, owning, and investing in real
property in a foreign country (i.e., Italy),
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December 2014 | All rights reserved ©Financegroupholding
SALE PROCESS
It is generally advisable to the US buyer to
seek the assistance of a licensed real estate
agent (agente immobiliare) for the initial
property search. Under Italian law, the agent
could be either a “mediatore” or a
“mandatario.”
The Mediatore: If the agent is a mediatore,
his/her commission (provvigione) is usually
paid by both the buyer and the seller; the
mediatore has a duty to facilitate the
transaction, put the seller and the buyer in
touch with each other, and inform each of
them of anything known to him/her which
may be material or relevant to his/her clients.
The Mandatario If the agent is a mandatario,
only the buyer pays the commission, and the
agent acts in the interest of his/her client only.
Generally speaking, the Italian real estate
market – both residential and commercial has performed strongly over the past few
years; moreover, in recent years Italy has
substantially reformed its legal system in
many fundamental sectors with the explicit
purpose of simplifying its commercial and
fiscal legislation and creating an even
more favorable legal and tax environment
for domestic and foreign investments. That
being said, all foreigner buyers/investors
(hereinafter collectively referred to as
“buyers”) desiring to invest in Italy should
always seek competent legal assistance
before embarking in any real estate project;
buying a property in Italy, indeed, may often
result in a rather complex legal process due
to specialized procedures and practical
difficulties peculiar to the Italian market.
All real estate agents must be registered
with the local Chamber of Commerce
(Ruolo degli Agenti d’Affari in Mediazione); if
the agent is not registered, he/she will be
liable to fines and other penalties and, more
importantly, will not be entitled to the agreed
upon commission. The buyer will generally
be required to sign a standard contract to
retain the services of the real estate agent:
such contract should always be carefully
analyzed before its execution, and special
attention should be paid particularly to the
terms relating to the amount of the agent’s
commission, the time when it will become
payable, and the available mechanism for
controversy resolution in case of fee dispute.
Once the buyer has finally selected, alone or
with the help of the real estate agent, the
property that he/she wants to purchase,
the buyer will start, usually with the
assistance of his/her attorney, the planning
activity necessary for the choice of the legal
ownership of the property, as well as the
negotiation process with the seller.
Private individuals can purchase Italian
properties and/or real estate assets as
follows:
a) Under their own personal name, in joint
name together with their spouse or copurchaser/s, in the names of their children, or
in the name of somebody who will eventually
inherit the property from them; or
b) Through an existing or a newly-formed
Italian company, or through an existing or a
newly- formed foreign company.
Companies wishing to invest in Italian real
estate can purchase properties and/or real
estate assets “directly” under their own
corporate/institutional name, or “indirectly”
through an existing or a newly-formed Italian
company, or through an existing or a newlyformed foreign company.
Once the buyer has selected the property,
decided between direct and indirect
ownership, and made proper financial
arrangements for the financing of the
investment, the buyer generally will come up
with a “Reservation Offer” (Proposta di
Acquisto) and pay a relatively small deposit
to the seller (approximately 10% of the final
price).
The “Proposta di Acquisto” The Proposta is
a written proposal. Italian law requires all
contracts involving the transfer of real estate
to be in writing. Usually, the Proposta takes
the property off the market for a specified
period of time during which the buyer, togical
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December 2014 | All rights reserved ©Financegroupholding
advisor/s, can conduct the necessary checks
on the property. The buyer should always pay
special attention before signing any Proposta
as this offer is usually irrevocable (proposta
irrevocabile) and, thus, binds the buyer - for
the specified period – in the purchase of the
property, but it does not bind the seller until
the moment the seller formally accepts it.
Therefore, if the buyer does not proceed with
the purchase because of a “legal problem,”
the buyer is usually contractually entitled to
the return of the deposit previously paid; on
the other hand, if the buyer does not go
ahead simply because he/she has changed
his/her mind, the buyer will usually lose this
deposit.
If the buyer does go ahead with the purchase,
the deposit will be treated as a part payment
on the final price of the property.
Any property may be encumbered with a
variety
of
restrictions,
limitations,
mortgages (ipoteche), easements (servitu’),
encumbrances (gravami), town planning,
environmental, and landscape obligations,
etc. Therefore, before executing any legal
documents, contracts, and deeds involving
Italian real estate property, the relevant public
registers should always be thoroughly
searched, usually with the technical
assistance of the attorney, and of the landsurveyor (geometra) or architect (architetto).
In addition, the buyer wishing to purchase the
property through a mortgage (mutuo
ipotecario) will have to ensure that the seller
agrees in the preliminary contract to the
constitution of such mortgage on the property
prior to the drawing up of the final deed of
sale (Rogito) .
value of the specific property.
The “Compromesso”
When the seller accepts the buyer’s offer and
formally communicates his/her acceptance to
the buyer, the two of them have entered into
a binding agreement, which is usually
formalized in the “preliminary contract”
(Contratto preliminare di vendita or
Compromesso).
In general terms, the Compromesso
stipulates that both parties agree to buy and
sell the property, and that they concur on the
terms and conditions of the sale.
The Compromesso is often prepared by the
real estate agent or by the construction
company; however, all buyers should always
seek the assistance of their Italian attorney to
check all terms and conditions of this
document
properly
as
any
errors,
misunderstandings, or omissions in it could
have far-ranging legal as well as financial
consequences.
In short, the Compromesso is a binding
legal agreement to complete the purchase
at some future specified date, in the offices of
a local Italian notary.
As mentioned before, the notaio is a public
official who is legally empowered by the
Italian government to witness, validate, and
register deeds and contracts for the sale and
purchase of Italian property.
The activity and functions of the notary are
regulated by the Italian notarial law (legge
notarile); the notary, although usually
selected by the buyer, is independent and
impartial, and charges legally-fixed fees for
his/her services, computed on a sliding scale
of charges, depending upon the declared sale
Considering the fact that the Compromesso
is a commitment to buy the property and pay
the corresponding price, and that a deposit is
usually paid at the time of its execution, it
is of the utmost importance for the buyer –
before executing such contract - to have
obtained all documentation and search
reports on the property or, at the very least,
to have ascertained all legal and practical
problems, and agreed with the seller a
timetable to sort them out before the final
closing (Rogito Notarile).
At the time of execution of the
Compromesso, a deposit (Caparra) – usually
ranging between 10% and 30% of the final
price – is paid by the purchaser to the seller.
Under Italian law, the legal definition of this
deposit can have very serious implications for
the buyer. In fact, if such deposit is defined
as “Caparra Confirmatoria,” the buyer, in
case of his/her default on the agreed terms
of the contract, and upon the seller’s
rescission of the contract (rescissione del
contratto), will automatically lose the
whole deposit paid. Conversely, in the
event of seller’s default, the seller will be
legally bound to pay to the buyer double the
sum originally received as deposit.
On the other hand, if the deposit is defined
as “Caparra Penitenziale,” then, subject to
the actual wording of the contract, it will
enable either or both parties to the contract to
withdraw (recesso) from the transaction,
allowing the seller to keep the deposit
paid, in case of buyer’s withdrawal, or
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December 2014 | All rights reserved ©Financegroupholding
compelling the seller to return the deposit
received, in case is the seller the party
terminating the contract.
The “Trascrizione”
Since January 1997, the Compromesso can
be registered (Trascrizione) in an effort to
better protect the buyer vis-à-vis the seller,
as well as against concurrent adverse rights
of
third
parties,
provided
that
the
Compromesso is drafted either as a “public
deed” (atto pubblico) or as
a “certified private deed” (scrittura privata
autenticata) - the intervention of a notary is
thus necessary.
Generally speaking, it may be worth registering
the Compromesso if:
a ) a long period of time between the
Compromesso and the final deed of sale is
expected; and/or
b) the seller is a construction company and,
thus, it might be potentially exposed to risks of
bankruptcy (fallimento). The “Rogito Notarile”
The executed preliminary contract will be the
basis upon which the final “Deed of Sale”
(Rogito Notarile) will be drafted by the notary
and executed by the parties. Usually the
choice of the notary will be made by the
purchaser as he/she will be the party
responsible for the payment of the notary’s
legal fees. The execution of the Rogito will
normally take place in the offices of the notary
and, eventually, in the presence of two
witnesses (testimoni); during the stipulation
(Stipula), the notary will read and explain to
the parties the clauses of the deed, providing
the parties with impartial advice as to all legal
aspects arising from the transaction. At the
moment of signing the deed, the buyer will
tender the previously agreed-upon payment to
the seller and the seller will deliver to the buyer
all ownership documents and the keys for the
property.
PROPERTY DUE
DILIGENCE
In very general terms, the documentation and
related due diligence activity will include, but
will not be limited to:
a) “Title deed of the property” (Titolo di
proprieta’ e/o di provenienza) This document
confirms the ownership of the property and the
seller’s good title, and reports eventual
encumbrances,
limitations,
restrictions,
easements (servitù), mortgages (ipoteche), etc.
affecting the property. Particular attention
should be paid when the buyer purchases a
property that the seller has received by
inheritance or gift;
b) “Certificate of urban destination”
(Certificato di destinazione urbanistica)
This document must be attached to any deeds
transferring real rights on non-built lands to
show to the purchaser the destination of that
specific parcel of land in the Town-planning
Scheme (Piano Regolatore) and, therefore, the
economic usability of the land object of the
transfer. This certificate must be obtained
by
the owner/seller from the Municipality
(Comune) where the land is located;
c)“Authorization for division into lots”
(Autorizzazione alla lottizzazione) Italian law
provides for the nullity of a purchase of parcels
of land when the purchase is not accompanied
by specific authorization for residential division
into lots;
d) “Town-planning Conformity” (Liceità
urbanistica)
For commerciability purposes of the real estate
object of the sale, in case the construction
resulted begun after September 1967, it is
necessary to make express mention of the
essential terms of the authorization (i.e.,
construction/building license, etc.);
e) “Certificate of Indemnity” (Concessione in
sanatoria)
This document regularizes any construction
works or restructuring works modifying the
structure, size and/or use of the property, done
on the property in the absence of or without
compliance
with
required
administrative
licenses, authorizations, and permits;
f) “Certificate of Habitability” (Certificato di
agibilità) This document is issued by the
Municipality where the property is located,
and certifies the existence of the safety,
health, and energetic efficiency conditions of
the property and of its utilities systems;
g) “Preemptive rights” (Diritto di Prelazione)
All real estate properties of historic and artistic
value are subject to the preemptive rights of
the Italian Ministry of Cultural Heritage and
Cultural Activities (Ministero per i Beni e le
Attività Culturali). Therefore, the owner of this
type of property is required by law to inform in
advance the competent local ministerial office as
to any proposed transfer having as object that
specific property;
h) “Cadastral Aspects” (Aspetti catastali)
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December 2014 | All rights reserved ©Financegroupholding
The
Italian
cadaster
(catasto),
the
general
registry
of
all
real
estate
assets/properties located in Italy, was created
to:
- register, specify, and describe all Italian-situs
properties;
- ascertain the ownership of as well as other
eventual concurrent real estate rights (diritti
reali) on real estate properties, evidencing their
variations; and to
- permit a fair distribution of the fiscal
burden levied on real estate properties.
Depending upon the type of real estate –
lands or buildings – two different cadasters
exist, namely the “land cadaster” (catasto
dei terreni) and the “urban cadaster” (catasto
urbano). Before executing any deed of
purchase of Italian property, it is necessary to
conduct proper search on the exact status of
the property and its cadastral compliance
(regolarità catastale) through consultation of the
documentation on file at the Italian Agency of
the
Territory
(Agenzia
del
Territorio).
Specifically,
the
property’s
blueprint
(planimetria) and cadastral maps (mappe
catastali) will have to be obtained and
compared with the actual status of the property.
In case of non-conformity, a “declaration”
(denuncia di variazione) will need to be filed to
obtain the regularization of the property;
J)
“Condominium
Aspects”
(Aspetti
condominiali)
The
condominium
rules
(regolamento
condominiale) regulate the relationship among
the various owners for the joint use and benefit
of the common parts of the building (including
rights, duties, and prohibitions);
k) “Administrative Aspects (Aspetti tecnico
amministrativi – Sicurezza Impianti, Sicurezza
Cantieri, Barriere Architettoniche) For safety
purposes in the building sites and utilities
systems, all constructions built after 1996 need
to be accompanied by a “building file” (fascicolo
del fabbricato); in addition, for properties built
after 1990, conformity certificates of the
installed systems will be required. Moreover, to
promote the elimination of physical barriers in
favor of physically impaired persons, properties
built after 1989 will need to be accompanied by
a certificate attesting the level of accessibility,
visibility, and adaptability of the property in
question; and
L)
“Environmental
Aspects”
(Aspetti
ambientalistici). The property needs to be in
compliance
with
Italian
environmental
regulations and laws issued for public safety. In
particular, if pollution levels exceed legally-fixed
thresholds, the owner will generally be
liable, and will bear the costs for
implementing the specific safety measures
necessary to remedy the current situation
and prevent future pollution.
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December 2014 | All rights reserved ©Financegroupholding
INVESTMENT BASICS
from the tax authorities.
Basis – Resident companies are taxed on
worldwide income; nonresident companies are Taxation of dividends –
taxed only on Italian- source income.
“Participation exemption” below.
Taxable income – The taxable income of a
resident company (and an Italian branch of a
foreign company) for corporate income tax
purposes is its business income, which consists
of net income earned in a financial period. All
income derived by a company (or an Italian
branch) subject to corporate income tax is
deemed to be business income, e.g. income
from a trade, passive income (e.g. dividends,
interest, royalties) and capital gains. Taxable
income is based on the results shown in the
profit and loss (P&L) account, with certain
adjustments.
If a company does not have sufficient revenue
in the P&L or is not as profitable, as determined
on the basis of certain coefficients (a
“nonoperating company”), presumptive taxable
income may apply at a higher corporate tax rate
and the relevant year’s tax losses, if any, will be
disallowed (VAT receivables also may be
Residence – A company is resident for tax forfeited by a nonoperating company).
purposes if its legal seat, place of effective
management or main business activity is in Italy A company that records tax losses for three
for the greater part (i.e. at least 183 days) of the consecutive fiscal years—or that, in such
fiscal period. A foreign company that holds a period, records tax losses in two fiscal years
controlling participation in an Italian company is and is not as profitable, as determined on the
deemed to have its place of effective basis of certain coefficients, in the other fiscal
management in Italy and, therefore, to be year—will be considered a nonoperating
resident in Italy for corporate tax purposes if the company as from the fourth fiscal year.
foreign company is controlled by an Italian The nonoperating companies regime usually
resident or managed by Italian residents applies to small companies. Application of the
representing the majority of its board of regime can be avoided by requesting a ruling
directors.
Currency – Euro (EUR). Foreign exchange
control – There are no foreign exchange
controls or restrictions on repatriating funds.
Residents and nonresidents may hold foreign
currency within and outside the country, and
direct and indirect investments may be made in
any currency. For tax purposes, however, all
holders of currency are required to declare
funds held outside Italy and funds that are
repatriated to Italy without a bank intermediary.
Accounting principles/financial statements –
Italian GAAP and IFRS/IAS.
Financial statements must be prepared
annually. Consolidated accounts must be
prepared if certain thresholds are exceeded.
Principal business entities – These are the joint
stock company (SpA), limited liability company
(SrL) and branch of a foreign company.
See
under
Capital gains – Capital gains generally are
treated as ordinary income and taxed at the
27.5% corporate income tax rate. Capital gains
derived from the sale of participations, however,
are 95% exempt from taxation if the following
requirements are met: (1) the participation has
been held continuously at least for a period that
may range between 12 and 13 months; (2) the
participation is classified as a financial fixed
asset in the first financial statement closed after
the participation was acquired; (3) the company
in which the participation is held is not resident
in a country on the black list of tax havens
annexed to Italy’s CFC legislation; and (4) the
company in which the participation is held
carries out a business activity (this requirement
will not be met if assets are represented
primarily by real property not used in the
business activity). The last two conditions must
have been satisfied continuously over the last
three years (or less if the company’s life is
shorter).
Losses – Losses may be carried forward and
offset against corporate taxable income. As
from 2011, tax losses are no longer subject to a
five-year expiration period, even for losses
incurred in previous years. However, 20% of a
year’s taxable income cannot be offset against
tax losses carried forward and will be subject to
corporate tax (the “minimum tax” rule). Losses
incurred by a company during its first three
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December 2014 | All rights reserved ©Financegroupholding
taxable periods may be carried forward and
used to fully offset corporate taxable income,
but only if they relate to a new business activity
(e.g. the losses may not have been incurred in
the course of a merger or business
contribution). The carryback of losses is not
permitted.
Rate – The corporate tax (IRES) rate is 27.5%,
plus the regional tax on productive activities
(IRAP, generally 3.9%), as discussed under
“Other taxes on corporations.” “Non-operating”
entities are subject to a 38% corporate tax rate.
Surtax – The 10.5% surtax that applied to
certain companies operating in the energy
sector for three fiscal periods (2011, 2012 and
2013) is reduced to 6.5% as from the 2014
fiscal period. For the tax period in progress as
of 31 December 2013, companies carrying on
financial or insurance activities are subject to a
corporate tax surcharge of 8.5%.
Alternative minimum tax – There is no AMT,
but a resumptive taxable income applies to
nonoperating
companies
under
certain
conditions, as discussed under “Taxable
income,” above.
Italian resident corporate taxpayers are 95%
exempt from corporate income tax.
However, the exemption does not apply if the
subsidiary is resident in a listed tax haven
country or the dividends are distributed by a
black list country through an interposed
nonblack list country. There is no holding period
or minimum ownership percentage to qualify for
the 95% exemption. (See also under “Capital
gains”.) Holding company regime – There is no
specific holding company regime. As described
above, however, dividends and capital gains on
the sale of a participation may benefit from a
95% exemption.
Incentives – All incentives, which are based on
the location and size of the business, must
comply with EU rules. When companies
negotiate incentives, they must determine
whether the incentives are subject to prior
approval or subsequent investigation by the EU.
Incentives are available in the form of capital
grants, easy-term loans or tax credits. Some
incentives are granted automatically if specified
requirements are met; others require the
completion of evaluation procedures. Certain
incentives must be negotiated.
Withholding tax:
Dividends – Dividends paid to a nonresident
corporation generally are subject to a 20% final
withholding tax (with a
potential refund of the foreign tax paid on the
dividend by the recipient, up to one-fourth of the
Italian withholding tax) unless the rate is
Participation exemption – Domestic and reduced under a tax treaty or the dividends
foreign-source dividends paid by subsidiaries to qualify for exemption under the EU parentForeign tax credit – A tax credit is allowed
against Italian net tax for final foreign taxes paid
on foreign-source earnings in the year in which
the taxes were paid. The amount of the foreign
tax credit may not exceed the amount of Italian
tax due.
subsidiary directive. To qualify for the
exemption under the directive, the parent
company must hold directly at least 10% of the
subsidiary for at least one year. Anti-abuse
rules have been implemented. A domestic final
withholding tax of 1.375%
applies to dividends (from profits generated as
from 2008) distributed to shareholders resident
in the EU and to qualified shareholders resident
in an EEA country.
Interest – Unless reduced by a tax treaty,
Italian-source interest paid to a nonresident
generally is subject to a 20% final withholding
tax. Interest derived from a direct/indirect
investment in government bonds and similar
securities is subject to a 12.5% substitute tax
(domestic exemptions apply). Under Italy’s
implementation of the EU interest and royalties
directive, qualifying interest payments are
exempt from withholding tax.
Royalties – Royalties paid to a nonresident
company are subject to a 30% withholding tax
calculated (generally) on
75% of the gross royalty, resulting in a final tax
of 22.5%. The withholding tax may be reduced
under a tax treaty or zero-rated under the EU
interest and royalties directive.
Technical service fees – Fees paid to a
nonresident for the use of industrial, commercial
or scientific equipment located in Italy are
subject to a final 30% withholding tax, unless
reduced under a tax treaty. Management fees
are exempt from withholding tax.
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December 2014 | All rights reserved ©Financegroupholding
Branch remittance tax – No
Capital duty – A negligible fixed registration tax
is levied on contributions of cash in exchange
for shares. Other assets contributed may be
subject to a registration tax or VAT, depending
on the situation.
Payroll tax – No
Real property tax – The municipal authorities
levy tax on the possession of immovable
property at various rates, depending on the
municipality.
Under
certain
conditions,
construction companies are not subject to the
real property tax.
Social security – Mandatory social charges
paid by the employer vary, depending on the
employee’s job and the number of employees in
the company. All remuneration, whether in cash
or in kind, generally must be taken into account
in determining social charges. Remuneration
usually includes salary, overtime pay and
bonuses, premiums and indemnities for
hazardous working conditions, 13th and (where
applicable) 14th month bonuses, 50% of out-oftown compensation and travel outlays, cost-ofliving allowances and voluntary bonuses.
Stamp duty – Stamp duty is levied on legal and
banking transactions, at varying rates.
A “Tobin tax” applies in the form of a stamp duty
on transfers of shares and other financial
instruments issued by Italian companies
(including derivative instruments, if one of the
parties to the transaction is Italian tax resident).
The tax rate for 2014 is 0.20% of the transaction
value, reduced to 0.10% where the sale takes
place on a listed market (a flat tax is applied on
the value of derivative instruments).
Transfer tax – The transfer of real property
situated in Italy is subject to transfer tax
(registration, mortgage and cadastral tax)
and/or VAT, with the rate depending on the
property transferred, the status of the transferor
and other factors.
employment expenses is deductible from the
IRES taxable base. Banks or other financial
institution/companies
(including
holding
companies)
and
insurance
companies
determine the net added value with specific
criteria and are subject to the IRAP at the higher
rates of, respectively, 4.65% and.5.90% (each
region may apply an increase up to 1%). The
provisions governing nonoperating companies
also apply to IRAP.
Other – IRAP, or the regional tax on productive
activities, is levied on the net value of the
production derived in each Italian region by
resident companies. The ordinary tax rate is
3.9% (each region may apply an increase up to
1%). IRAP is calculated on the “net added
value” of production as defined by the relevant
tax rules (but basically derived from statutory
accounts). Net added value of production
comprises the value of production minus some
costs of production. In particular, the following
are not relevant in determining the taxable base
for IRAP purposes: employment costs
(excluding social contributions), extraordinary
revenue and expenses and financial revenue
and expenses.
Contributions for all forms of compulsory
insurance for work-related accidents and
expenses related to apprentices are deductible
for IRAP purposes. As from 2014, companies
increasing the number of employees hired
under an open- ended contract benefit, under
certain conditions, from a specific deduction for
IRAP purposes. If the taxpayer has interest
expense, 10% of the annual IRAP paid is
deductible from the IRES taxable base. IRAP
paid in connection with nondeductible
Anti-avoidance rules:
Transfer pricing – The business income of a
resident enterprise arising from transactions
with nonresidents that directly or indirectly
control the resident company, are under its
control or are controlled by the same entity that
controls the resident company, is assessed on
the basis of the arm’s length value of the goods
transferred, services rendered or services
received. Companies are deemed to be
controlled in the case of “dominant influence.”
Dominant influence is presumed when, for
instance, one has exclusive sales rights to the
other’s products; financial or technological
dependence exists; there is a family
relationship; or business decisions are made or
influenced by the other party. Under Italian tax
rules, the arm’s length value is the average
price or consideration paid for goods and
services of the same or similar type in freemarket conditions and the same level of
commerce at the time and place the goods and
services were purchased or performed or, if
there are none, at the nearest time and place.
As for the methods used to determine the
normal value, the OECD guidelines generally
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December 2014 | All rights reserved ©Financegroupholding
are followed and both the traditional methods
(comparable uncontrolled price, cost-plus and
resale price methods) and profit-based methods
(such as the transactional net margin method)
are utilized and may be acceptable based on
the specific circumstances.
Transfer
pricing
documentation is not
mandatory, but a taxpayer can obtain protection
against penalties in the event of a transfer
pricing adjustment by maintaining appropriate
documentation and disclosing its existence in
the annual income tax return.
Thin capitalization – Italy does not have thin
capitalization rules per se, but net interest
expense is deductible only up to an amount
equal to 30% of EBITDA (plus financial leasing
installments). Both excess interest and EBITDA
may be carried forward indefinitely to increase
the deduction of interest expenses in a
subsequent year. Companies included in a
consolidated
group
may
offset
the
nondeductible excess amount against the 30%
EBITDA not used by other entities in the group.
A virtual tax consolidation of a foreign company
is permitted for the sole purpose of the 30%
EBITDA computation. In addition, a deduction is
permitted from corporate tax of a notional yield
of the annual equity increases (with certain
exclusions and deductions) for calendar year
taxpayers. The notional yield was 3% for the
2013 fiscal year and is 4% for the 2014 fiscal
year; it will be 4.5% for the 2015 fiscal year,
4.75% for the2016 fiscal year and will be
determined annually as from the 2017 fiscal
year. The deduction is available each year,
provided the equity increase is not diminished.
Controlled foreign companies – Under the
CFC regime, profits of a nonresident entity are
attributed to an Italian resident where the
resident controls, directly or indirectly, the
nonresident entity and the nonresident is
resident in a tax haven jurisdiction included on
Italy’s black list. The CFC regime also is
applicable when the foreign entity is resident
in a country that is not on the black list if the
entity is subject to an actual tax rate lower than
50% of the Italian rate and more than 50% of its
income is passive or derived from intercompany
services.
The income of a CFC is attributed to the Italian
resident in proportion to its participation in the
CFC, and the profits of the CFC are taxed in the
hands of the Italian resident at its average tax
rate. However, for companies, the average rate
cannot be lower than the ordinary corporate
income tax rate of 27.5%. Taxes definitively
paid abroad (i.e. underlying taxes) may be
credited against the Italian tax levied on the
CFC income. A ruling may be requested from
the tax authorities to avoid the application of the
CFC regime, but the Italian resident controlling
entity must demonstrate that the CFC effectively
carries on actual industrial or commercial
activities as its main business activities in the
black list jurisdiction (this exemption is not
applicable if more than 50% of the income of
the foreign company consists of “passive
income,” e.g. income from managing, holding or
investing in securities and shares, from the sale
or granting of the right to use intangible rights or
from intercompany activities).
The CFC regime also can be avoided if the
resident controlling entity can prove that its
participation in the CFC is not designed for the
purpose of allocating income to the entity in the
black list jurisdiction. However, the controlling
entity must demonstrate that the CFC’s income
does not benefit from a privileged tax regime
and it must meet certain other requirements.
The CFC rules also apply to Italian residents
owning a participation of 20% (10% for
companies listed on the stock market) or more
in a tax haven-located entity.
Other – Other specific anti-abuse provisions
may apply. These primarily target tax havens
(e.g. costs incurred with black list entities are
deductible only if specific conditions are
satisfied), losses and interest expense carry
forward in the case of extraordinary transactions
(e.g. mergers and demergers), withholding tax
exemptions under EU directives and the
assessment of Italian tax residence for foreign
entities. Taxpayers also are subject to a broad
anti- abuse provision aimed at recapturing
undue tax benefits from specific transactions
lacking a business purpose. The “abuse of law”
doctrine, emphasizing the importance of a
business purpose in any transaction where tax
savings are generated, also may apply.
Disclosure requirements – Costs incurred with
black list entities must be separately indicated in
the annual income tax return.
Tax year – Taxpayers may use the calendar
year or a financial year.
Consolidated returns – Consolidation is
available to domestic groups, i.e. between a
parent company and its resident subsidiaries
that are under its direct or indirect control. Each
subsidiary in the group is free to choose
whether or not to consolidate. The control
requirement is met when the parent company
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December 2014 | All rights reserved ©Financegroupholding
holds more than 50% of the share capital of
another company and is entitled to more than
50% of the profits of that company.
Domestic consolidation also may be adopted if
the controlling entity is a nonresident company,
but only if that company is resident in a country
that has concluded a tax treaty with Italy and
carries on business activities through a
permanent establishment (PE) in Italy, and the
participations are allocated to the Italian PE.
Under domestic consolidation, a single taxable
income is calculated for all consolidated
companies. Once an election for consolidation
is made, it may not be revoked for three years
unless the subsidiary ceases to be controlled by
the parent company. Domestic tax consolidation
is not available to companies benefiting from a
reduction of the corporate tax.
If certain requirements are met, a worldwide tax
consolidation regime is available, under which
all foreign controlled companies must be
included in the tax group (i.e. the “all in-all out”
principle). Tax consolidation is not available for
IRAP purposes.
2013 fiscal year, financial and insurance
companies must calculate the advance
payments on 130% of the amount of corporate
income tax paid in the previous year; other
companies must calculate the advance
payments on 102.5% of the amount of
corporate income tax paid in the previous year.
For the 2014 fiscal year, all companies must
calculate the advance payments on 101.5% of
the amount of corporate income tax paid in the
previous year.
Penalties – Italian tax rules include a
comprehensive set of penalty and interest
provisions for failure to pay and failure to file,
with relevant amounts generally determined
based on the specific violation (above specific
thresholds, tax violations are criminal offenses).
Rulings – Advance rulings relating to transfer
pricing may be obtained from the tax authorities.
Such rulings also may apply to dividends and
royalties. A ruling may be requested from the
authorities to avoid application of the CFC
regime and certain anti-abuse provisions, to
obtain the correct interpretation of an unclear
Filing requirements – A company must file the tax provision or to avoid the application of the
annual corporate income tax returns (IRES and nonoperating companies regime.
IRAP) electronically within nine months
following the end of the financial year. Two Personal taxation:
advance payments of corporate income tax
must be made: the first installment is 40% of the Basis – Residents are taxed on worldwide
amount of corporate income tax paid in the income; nonresidents are taxed only on Italianprevious year, and the second is 60% of the source income.
previous year’s tax. A company whose financial
year does not correspond to the calendar year
Residence – For income tax purposes, an
must make advance payments by the 16th day
individual is deemed to be a resident if he/she is
of the sixth month and by the end of the 11th
registered at the Italian Civil Registry or is
month after the end of the financial year. For the
domiciled in Italy for more than 183 days in a
year (184 days in a leap year). Filing status –
Joint filing is possible in specific circumstances.
Taxable income – Individual income tax is
imposed on employment income, income from
independent activities, income from capital,
business income, income from immovable
property and other miscellaneous income.
Capital gains – Capital gains derived by an
individual on the disposal of Italian immovable
property generally are taxed as miscellaneous
income, but exempt from tax if the individual
held the property for more than five years.
Gains derived from the sale of a principal
residence are not subject to tax.
Capital gains on the disposal of an investment
of no more than 25% of an unlisted company
are taxable.
Deductions and allowances – Deductions
for dependents, employment income, social
security contributions and other specific
expenses (e.g. family charges, medical
expenses) are available in calculating taxable
income.
Rates – The personal income tax is
progressive, rising to a top rate of 43% for
income exceeding EUR 75,000. The other rates
are: 23% on income up to EUR 15,000; 27% on
EUR 15,001-EUR 28,000; 38% on EUR 28,001EUR 55,000; and 41% on EUR 55,001-EUR
75,000. Additional regional tax may range from
1.2% to 2.63%, depending on the region in
which the individual lives, and an additional
municipal tax ranging from 0% to 0.9% may
P a g e | 12
December 2014 | All rights reserved ©Financegroupholding
apply, depending on the taxpayer’s municipality.
Interest, nonqualified dividends and certain
capital gains (e.g. gains on an investment of no
more than 25% in an unlisted company) are
subject to a flat tax rate of 20%. Qualified
dividends and capital gains are subject to the
ordinary tax rate on 49.72% of their amount.
Other – An additional 3% solidarity surtax on
income exceeding EUR 300,000 is due until the
2016 fiscal year.
0.3% to the basic tax rate.
Property tax on a principal abode has been
partially abolished for the 2013 fiscal year. For
the 2014 fiscal year, the IMU is expected to be
completely abolished for any kind of
real estate and replaced with another tax still
under discussion by the parliament. New
provisions are expected to be enacted by June
2014.
Inheritance/gift tax – The taxable amount
generally is represented by the value of the
Other taxes on individuals:
assets and rights inherited. Rates are 4%,
6% or 8%, depending on the relationship
Capital duty – A negligible registration tax is between the deceased and the beneficiaries,
and exemptions up to EUR 1 million may apply
levied on contributions of cash in exchange
of shares. Contribution of other assets may on bequests to close relatives.
trigger registration tax at various rates.
Net wealth/net worth tax – Financial assets
Stamp duty – Stamp duty is levied on legal and held abroad (i.e. bank accounts, participations,
etc.) by an Italian resident individual are taxed
banking transactions at varying rates.
The Tobin tax applies in the form of a stamp at a rate of 0.15% of the market value (for the
duty on transfers of shares and other financial 2014 fiscal year). Immovable property owned
instruments issued by Italian companies outside of Italy by an Italian resident individual
(including derivative instruments, if one of the is subject to tax at a rate of 0.76% of the original
parties to the transaction is Italian tax resident). cost or market value of the property. Property
The tax rate for 2014 is 0.20% of the transaction tax on principal residences may benefit from a
value, reduced to 0.10% where the sale takes lower rate of 0.4%.
place on a listed market (a flat tax is applied on
Social security – Individuals working in Italy
the value of derivative instruments).
generally are subject to social security
Capital acquisitions tax – No
Real property tax – Property owners, whether or contributions. Rates vary depending on the
not resident, are liable for property tax on sector and the employee’s job title. Social
buildings and lands owned in Italy for their own security in respect of the state pension fund
use or as investments (the former IMU). The borne by the employee generally is equal to
basic tax rate is 0.76% of the taxable value of 9.19%, plus 1% over EUR 45,530 (the ceiling
the property, but the competent municipality can applicable for the 2013 fiscal year) up to a
provide for an increase or reduction up/down of cap of EUR 99,034 (the ceiling applicable for
the 2013 fiscal year) for employees who started
contributing to an obligatory social security
scheme after 1 January 1996. For those who
started
contributing
before
that
date,
contributions are calculated on the total amount
of employment income received.
Other – An additional 10% tax is levied on
bonuses, stock options and variable payments
paid to managers and ongoing collaborators
working in the financial sector.
The tax applies only on the portion of variable
remuneration exceeding the fixed remuneration
paid.
Administration and compliance:
Tax year – Calendar year
Filing and payment – All taxpayers, both
resident and nonresident, who derive income
subject to individual income tax must file an
annual tax return, except for individuals deriving
exempt income or income subject to a final
withholding tax and other specific categories of
income. The return must be filed between 1
May and 30 September of the year following the
tax year. Salaries and professional fees are
subject to deduction of tax at source.
Penalties – Penalties and interest apply for late
filing, failure to file and tax avoidance and
evasion.
Value added tax:
Taxable transactions – VAT is levied on the
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December 2014 | All rights reserved ©Financegroupholding
supply of goods and services, and on imports.
Rates – The standard VAT rate is 22%
(increased from 21% as from 1 October 2013),
with reduced rates of 4% and 10%. VAT
exemptions apply to financial services, medical
services, gaming and gambling, export sales
and the contribution of assets to a company
(e.g. purchases of capital goods). Importers pay
VAT on invoice plus duty, at rates equal to
those borne by locally made products
Registration – A taxpayer carrying out taxable
supplies in Italy is required to register for VAT
purposes. The taxpayer receives a VAT number
and a tax identification code and, in registering,
must disclose such information as the type of
taxpayer, place of activities, place of legal and
tax books and details of the legal
representative.
Filing and payment – An annual VAT
declaration and VAT return must be submitted
electronically by the end of February and by the
end of September of the following calendar
year.
Source of tax law: Corporate Income Tax Law,
Regional Tax on Productive Activities Law,
Individual Income Tax Law and VAT Law.
Decrees and instructions issued by the Ministry
of Finance.
P a g e | 14
December 2014 | All rights reserved ©Financegroupholding
ONE
LONDON OVERVIEW
TOP 5 REASONS TO INVEST
IN CALABRIA
A VERY ATTRACTIVE MARKET
Because is objectively very profitable , because you buy a
little and produces wealth with some enhancement of the
property purchased . Your will be a successful investment
that will increase exponentially over the years .
A SOLID MARKET
Because historically the housing market is stronger than
other investments, such as stocks and shares . Stock
prices can change in a day, and a significant value can
be lost in a matter of weeks , while the real estate market
has a cycle much slower , and -by always- uphill. In fact,
the value of properties in Italy for the last 60 years has
always grown.
THREE
VALUE INCREASE
Because market analysts see close the rise in prices, and from
the second half of 2015 there will be ' a showy shooting . This'
means that what you buy today, you will already be reassessed
within a year and a half , when the end of the global crisis on your
property will be worth much more than what you paid today .
EXPERIENCED PROFESSIONALS
Because your property investment is implemented by
procedures that allow a simple and linear control
operations, thanks to the advice of our professionals.
We will guide you in all administrative aspects carrying
on all the bureaucratic bargaining while going through
the sale process.
TANGIBLE ASSET
For the tangible nature of the goods purchased ,
which brings with it a sense of security . The investor
can touch, see and live constantly where his money
was invested.
P a g e | 15
December 2014 | All rights reserved ©Financegroupholding
ASTORIA RESIDENCE
Whether you want to spend only a few holiday or spend extended
stays in a unique setting , in a region with spectacular views of the
dream , rediscover the purity of the crystal quality of life and a
high level . Astoria Residence is an opportunity for you .
Designed according to the latest manufacturing technologies ,
taking advantage of the high quality materials but always taking
into account the need to maintain the highest standards of energy
efficiency , Astoria Residence is a residential complex desi gned for a foreign customer who likes to combine the joy to
dive in the traditions of this region , enjoy a home of great build quality but with investments to everyone . Astoria
Residence is a new concept of luxury to everyone . This residence is located a few steps from the sea of the Ionian
coast of Calabria , a few steps from the clear waters and close to any service is needed for a family , shopping malls ,
supermarkets , hospitals , etc.
P a g e | 16
December 2014 | All rights reserved ©Financegroupholding
ASTORIA RESIDENCE
Different sizes , spacious interiors and private garden in every home
Privacy , comfort and qualitaà these are the watchwords of the entire
concept of constructive Astoria Residence . for any information
please
contact
the
sales office of our
group
and
commercial
our
officers
to arrange a visit as
well as provide you
with
the
entire
technical department that will answer any question relating to the
residential complex Astoria Residence . Furthermore, our group is
able to provide financial solutions at rates very competitive and
financial advice and insurance for domestic and foreign customers
as well as for those who want to buy a property through a company
resident in Italy or abroad.
F
e
a
t
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December 2014 | All rights reserved ©Financegroupholding
Page |
18
December 2014 | All rights reserved ©Financegroupholding
DISCLAIMER
This document has been prepared by FINANCE
GROUP for the sole purpose of providing an
overview of the FINANCE GROUP Projects
(“Projects”) in order to assist buyers/investors to
determine whether the may be interested in
investing in the Projects (“Purpose”). The
information must be used for the Purpose (or
such other purpose prescribed by FINANCE
GROUP) and must not be used for any other
purpose.
This document is provided on a confidential
basis, and may not be reproduced in whole or in
part, nor may any of its contents be disclosed to
any other person, without FINANCE GROUP
prior written consent. This document is provided
by FINANCE GROUP for general information
purposes only.
The provision of this document does not in any
way constitute an offer or recommendation to the
recipient or any other party. It should not be
relied upon by the recipient in considering the
merits of any particular transaction. Nothing in
this document constitutes investment, legal, tax,
accounting or other advice. The recipient should
conduct its own independent investigation and
assessment of the contents of this document,
including obtaining investment, legal, tax,
accounting and such other advice as it considers
necessary or appropriate. This document is
provided in good faith by FINANCE GROUP and
is based on publicly available information and
information made available to FINANCE GROUP
by third parties including.
FINANCE GROUP has relied upon and
assumed, without independent verification, the
accuracy and completeness of all such
information. This document contains selected
information and does not purport to be allinclusive or to contain all of the information that
may be relevant to the Purpose. The recipient
acknowledges that circumstances may change
and that this document may become outdated as
a result.
FINANCE GROUP is under no
obligation to update or correct this document.
FINANCE GROUP, its related bodies corporate
and other affiliates, and their respective directors,
employees, consultants and agents (“FINANCE
GROUP”) make no representation or warranty as
to the accuracy, completeness, timeliness or
reliability of the contents of this document or the
basis of any statements or assumptions
contained. To the maximum extent permitted by
law, no member of the FINANCE GROUP
accepts any liability (including, without limitation,
any liability arising from fault or negligence on the
part of any of them) for any loss whatsoever
arising from the use of this document or its
contents or otherwise arising in connection with
it. Statements or assumptions in this document
contained in this document, including those as to
future matters, may prove to be incorrect. No
audit, review or verification has been undertaken
by the FINANCE GROUP or an independent third
party of the assumptions, data, results,
calculations and forecasts presented or referred
to in this document.
The recipient acknowledges that neither it nor
FINANCE GROUP intends that FINANCE
GROUP act or be responsible as a fiduciary to
the recipient, its management, stockholders,
creditors or any other person.
Each of the recipient and FINANCE GROUP, by
accepting
and
providing
this
document
respectively, expressly disclaims any fiduciary
relationship and agrees that the recipient is
responsible for making its own independent
judgments with respect to any transaction and
any other matters regarding this document.
The FINANCE GROUP may have interests in the
investment products referred to in the document,
including being directors of, or may have or may
in the future act in various roles including as
underwriter, dealer, broker, lender or financial
advisor to their issuers and may receive fees,
brokerage or commission for acting in those
capacities. Further, the FINANCE GROUP may
act as a market maker or buy or sell those
securities and other investment products as
principal or agent and as such may effect
transactions which are not consistent with this
information.
P a g e | 19
December 2014 | All rights reserved ©Financegroupholding
THE LAST BEST PLACE
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