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Focus on Italian real estate taxes

Posted on 12/04/2013

DSC02740Before investing in Italian real estate is important to have essential information on how the Italian legal and taxation system works.
Buying a property in Italy (and, in general, in every foreign country) could be a rather complex legal process due to specialized procedures peculiar to the Italian market.
First of all, it’s important to know that each real estate is identified using the land registry categories assigned by the provincial offices of the Inland Revenue.
In the event of acquisition of real estate, registration fee is applied or alternatively VAT (depending on the seller) as well as the mortgage and cadastral taxes.
Please note that, according to the principle of alternativity, for acts subject to VAT the proportional registration fee is not applied. The fixed registration fee (at the moment equal at € 168,00), the mortgage and cadastral taxes are in any case owed.
These taxes (registration fee, mortgage and cadastral taxes) are paid by the notary at the moment of registration.
Starting from 1st January 2006, for the sale of real estate for living (and relative outbuildings) carried out with regard to individuals who do not have commercial, craft or professional activities, the taxable base for the purposes of registration fee, mortgage and cadastral taxes can be provided by the cadastral value of the real estate, instead of the price paid. This is also known as “prezzo – valore” system.

The Italian Agenzia delle Entrate has recently released an important circular (n. 18E/2013) concerning taxes and real estate transactions.

You can dowload the circular (in pdf format) here.

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