Categories: Faq Corporate & commercial Law

The most frequent questions made to ILF Law Firm over the past 15 years regarding starting up a business in Italy.

Risks include hidden defects not found in inspections, tax issues if not well advised, restoration problems for older properties, difficulties obtaining mortgages, and legal/regulatory problems without local expertise. Let’s summarize the risks:

  • The bureaucracy: The Italian bureaucracy can be complex and time-consuming.
  • The property condition: Italian properties may not be as well-maintained as properties in other countries.
  • The location: Some parts of Italy are more prone to natural disasters than others.

You can sell your property at any time. Capital gains on the sale of Italian property are subject to tax, but the rate decreases the longer you hold the property. If you resell your property after 5 years from the purchase, even if it generates an important income, the difference in price does not represent a capital gain. So you don’t have to pay any tax on the “earnings”. Capital gains after 5 years are not subject to IRPEF or substitute tax.

Apart from the property price, what additional costs should I expect? Expect to pay for property transfer taxes, notary fees, legal costs, and agent fees. Typical purchase costs include the purchase price, mandatory notary fees, taxes on the purchase price, translation/legal fees, inspections, 3%-4% agent commissions, banking fees and land registry fee. These can add up to 10-20% of the purchase price. Annual property taxes also apply. There are ongoing costs like property taxes (IMU), utility bills, garbage fee (TARI), and maintenance. Capital gains tax applies to investment property sales.

Registration tax

2% (main residency) – 7% (vacation home) of the purchase price

Mortgage tax

2-4% of the loan amount

Cadastral tax

1% of the cadastral value of the property

Notary fees

1-2% of the purchase price

Legal fees

1-2% of the purchase price

Land registry fees

€200

The actual costs may vary based on the location, size, and type of property being purchased, as well as other factors such as the complexity of the legal work involved.

The steps involved in buying a house in Italy are:

  • Find a property that you are interested in.
  • Make an offer to the seller.
  • Sign a preliminary contract (contratto preliminare).
  • Pay a deposit (caparra confirmatoria).
  • Complete the sale (atto di compravendita).
  • Pay the taxes and fees.

The process generally includes those main steps:

  1. Property search
  2. Preliminary contract
  3. Notary deed (Rogito)

Entities exceeding a 10% voting rights share must declare their future intentions regarding the shareholding.

There are disclosure obligations for significant shareholdings. Beyond certain thresholds, a mandatory takeover bid obligation may be triggered.

They can initiate liability actions and challenge illegitimate resolutions.

They do not have specific duties but must act in good faith. In exceptional cases, controlling shareholders may be liable to minority shareholders or creditors.

There are ordinary and extraordinary meetings. Shareholders have rights to information, integration of the agenda, intervention, and voting.

They do not have direct responsibilities but approve changes to the bylaws that regulate the governance structure.

They can appoint and revoke directors but do not directly manage the company. However, controlling shareholders can influence strategic decisions.

There is a growing focus on creating sustainable long-term value, including through incentives for “loyal” shareholders.

Among the emerging trends are the role of outgoing Board of Directors in board elections, transparency in remuneration, and the promotion of a long-term perspective.

The main sources include the Italian Civil Code, the Consolidated Financial Act, Consob regulations, and the Self-Regulatory Code issued by Borsa Italiana.

Publicly traded joint-stock companies are established under Italian law. These companies take the legal form of “Società per Azioni” and can adopt different governance models: traditional, monistic, or dualistic.

To incorporate an Italian business, it is necessary to complete the process by instructing a Notary who needs to legalize the constituvie act of the company. Many activities can be done by professional attorneys appointed by a POA but incorporating a business completely remotely by yourself in Italy is not still possible.

It depends on the volume of business you are planning to generate. In general, for a single specific property, it could be more profitable not to establish a proper company but it could be more convenient to rent teh property as individual. If the project is to buy more propertis, it could be advisable to set up a company.

In theory, a non Italian resident is absolutely entitled to open an account at an Italian Bank. On the other hand, Italian Banks usually do not allowed a foreign to open a Bank account remotely and they require the physical presence of the applicant (at least once at the opening of the account)

To know if a non European is allowed to start a business in Italy (by incorporating an Italian company) there must be firstly check whether there is in force a Reciprocity Treaty between Italy and the State of residency of the investor. Please check here to see all the Treaties currently signed by Italy and with what States.