The Italian real estate market is nowadays experiencing a period of rapid growth. An analysis provided by CBRE, a leading company in the field of real estate investment consulting, indeed shows that such form of investment, with respect to the period from March to June of the current year, has doubled its volume. Moreover, during the first semester of 2017, Italian real estate investments have registered a growth of about 58% in comparison with the same period of the last year.
The great interest on such form of investment can be explained by referring to its peculiar advantages. Firstly, real estate investments are characterized by an adequate level of profitability (i.e., reference can be made to properties leased in important touristic places or university cities), low risks and good funding opportunities. Moreover, these investments are characterized by the high degree of personal supervision that an investor can exercise with respect to the project and to the invested capital.
As for the subjective requirements necessary for real estate investments, it should be investigated whether a foreign individual or legal person (e.g., a company) can buy properties in Italy.
In order to answer to that question, is it necessary to differentiate:
- Investors (individuals or legal persons) holding citizenship of an UE State, or alternatively stateless people, or refugees having resided in Italy for over three years, can buy properties at the same conditions set for Italian citizens;
- Foreign investors legally and regularly residing in Italy (i.e., holding a VISA and an Italian residence permit, or an EU/EEA residence permit) can buy properties at the same conditions set for Italian citizens;
- Foreign investors not residing in Italy can buy properties only where certain conditions are met, as analysed in the following part of the present article.
As for not-EU individuals or legal persons not residing in Italy, it is necessary to check whether the “condition of reciprocity” is fulfilled.
Such a condition must be met because, should the reciprocity be lacking, the sale contract of a real estate located in Italy and concluded by a not-EU investor would be null and void, being contrary to mandatory rules of law.
The reference norm in this respect is art. 16 of the Preliminary provisions to the Italian Civil Code, pursuant to which “a foreign individual or legal person can be entitled to the civil rights attributed to Italian nationals provided that the condition of reciprocity is fulfilled, and without prejudice to the provisions of special laws”.
The condition of reciprocity is respected by a third State where it grants, under its legal system, to Italian citizens “the same right they would be entitled in Italy, or a similar one, and provided that the third State does not discriminate, as for the exercise of such a right, an Italian national from its own citizens” (Italian Cassation Court, Decision n. 1681, Year 1993).
It is nevertheless not necessary to control the fulfilment of the reciprocity condition in case the national State of the foreign investor has concluded, with the Italian State, a bilateral investment treaty on the promotion and protection of investments.
For instance, this is the case of the People’s Republic of China (which concluded with Italy an Agreement concerning the Encouragement and Reciprocal Protection of Investments on 28.01.1985) and also of the Special Administrative Region of Hong Kong, (which concluded with Italy an Agreement for the Promotion and Protection on Investments on 28.11.1995). As a consequence, Chinese and H.K. individuals and legal persons (e.g. corporations) can directly buy the property (or other rights in rem) of real estates located in Italy.
In order to do so, the individual foreign investor or legal person (through its legal representative or its delegated person) must apply to the Italian Revenue Agency (Agenzia delle Entrate) for the attribution of the Italian Fiscal Code (Codice Fiscale), by filling and submitting the model AA5/6 (available online and in the agency’s offices).
Afterwards, the investor can proceed to the subscription of the sale contract in the presence of an Italian notary public, who will draw the contract and perform the compulsory controls on the personal identity of the parties and on the compliance with the land-registry and town-planning registration procedure. The notary public also verifies that there are no special rights over the real estate or obligations borne by it which might reduce its value.
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