Italy: Tax Relief for Construction Companies
By Dr Martin Lechner, Pichler Dejori Comploj & Partner
From 01 May 2019, Italy is offering tax relief to construction companies in order to promote the recovery of buildings in need of renovation. Between the period of 01 May 2019 and 31 December 2021, companies whose scope consists of the construction and recovery of buildings will be able to purchase entire buildings for a fixed amount of EUR 200 each, for registration, mortgage, and cadastral taxes.
The new provision is extremely interesting for the following cases:
- Acquisition of entire buildings in need of renovation from private individuals where the companies can save the ordinary applicable transfer tax equal to 9%.
- Acquisition of entire residential buildings in need of renovation from other VAT subjects where the companies can save the ordinary applicable transfer tax equal to 9%, if the transaction is VAT exempted.
- Acquisition of entire commercial buildings in need of renovation from other VAT subjects where the companies can save the ordinary applicable transfer tax equal to 4%.
In order to claim the benefit, the companies need to meet the following requirements, which must be mentioned in the deed of acquisition:
- Obligation to carry out the demolition and reconstruction or recovery of the entire building in the following ten years, in compliance with the regulations in force in the field of earthquake safety and in compliance with certain energetic building standards.
- Commitment by the company to sell 75% of the building within ten years.
If these conditions are not met within the ten-year period, the ordinary transfer tax must be paid, in addition to interests and a 30% penalty surcharge. As the tax relief is, at the moment, applicable only for the acquisition of entire buildings, discussions are in progress to further extend it to the recovery of partial buildings. Such an extension would considerably broaden the scope of application of the tax relief.
Dr Martin LechnerGGI member firm
Pichler Dejori Comploj & Partner
Auditing & Accounting, Tax Consulting
T: +39 0471 288333
For almost 40 years now, Pichler Dejori Comploj & Partner has provided advisory on tax issues, business management, and corporate law in relation to national and international clients. The main office is based in Bolzano, South Tyrol, Italy.
Dr Martin Lechner, Certified Chartered Accountant, advises local and foreign real estate investors and has matured a broad experience in assisting foreign investment funds investing in Italy. He is fluent in German, Italian and English.
Published: Real Estate Newsletter, No. 10, Autumn 2019 l Photo: Gabriele Maltinti - stock.adobe.com