Sale and leasing of industrial and commercial properties
The entrepreneur who decides to invest in Italy will have to choose where to exercise their own business and whether they want to buy or rent a property. In the case of a property purchase, as opposed to renting, where the costs are definitely more content and do not involve an initial outlay, it is necessary to make an initial investment and incur some expenses such as: notary fees, taxes, mortgage fees, maintenance of the building etc. The following paragraphs will describe the main features and differences between the sale and lease of real estate.
Buying and selling realestate
With buying and selling real-estate contracts one part transfers to another part, the right of ownership or other rights, over properties to receive the equivalent price. Contracts that transfer the ownership of real property must be by public deed on penalty of nullity.
Procedure to buy a property
In general to conclude a purchase agreement the following is necessary:
- one or more articulated stages of negotiations
- the proposal irrevocable purchase
- signing the preliminary contract
- signing the final contract of sale
The negotiation phase is earlier and appropriate up to the conclusion of the contract of sale and discharacterized by the freedom of the parties. The negotiation may be carried out by fax or via e-mail in relation to all elements of the future agreement or only the most important ones.
During the negotiation the main purpose of the parties is to assess the following aspects:
- fairness of the price
- state, origin and legal status of the property
- regularity of the plants
- regularity of the condos aspects
- regularity fiscal aspects
Once negotiations are concluded, the buyer may sign an “irrevocable offer to buy” that must be made in writing. The proposed purchase shall become binding for the seller when these affixes unequivocally in writing their signature.
With the preliminary contract, which the law requires in writing, the buyer and the seller are obliged to conclude, at a later time, the final contract of sale. The transfer of ownership of real property from the seller to the buyer takes place with the signing of the deed and final contract of sale, which is a public document written by a Notary Public with the formalities required by law. In order to make the act public and enforceable against third parties, the notary must arrange for the registration of the deed at the Tax Office and its transcription at the Real Estate Registry.
Documentation for the deed of sale
The following is a list of documentation required in the signing of the definitive purchase and sale of properties:
- In case of sale of land: it is necessary to attach the cud (certificate of urban destination)
- In case of a building sale: it is necessary to mention the extreme act of authorization (building permit extremes or building permits depending on the date of building construction). Please note that special rules apply if the property sold is well culturalized.
- Compliance declaration with cadastral data: starting from January 1st, 2010 for all sales contracts involving the transfer of existing house, the seller must declare, with reference to the plans filed in the Land Registry, the compliance with the cadastral data and floor plans. This declaration must be made under penalty of nullity of the contract
- Certificate of occupancy: the seller of a property must deliver to the buyer the certificate of occupancy, which is the document that certifies the legal characteristics of the property to fulfill its function as economic capital. The lack of a certificate of occupancy is due to depreciation of the asset • Energy Performance Certificate (so called APE): to validate the notary act of the sale the seller must proceed with the APE certification. The energy certificate is the official document that certifies the results of the energy performance of a building, it is valid for 10 years, and is produced by accredited subject (Certification Energy) or several recognized organizations at local and regional level.
Links: realestate registry www.catasto.it/conservatoria.html
Tax aspects of buying and selling realestate
In general, for the property sale utilized by companies, shall be applied exemption from VAT tax. In any case the parties may choose to charge VAT, giving expressed provision in the act of buying and selling option: in this case, the rate is 22%. In case the property is sold by construction companies or by any subject who did restoration work on the property (e.g. restoration, rehabilitation conservative, building renovation and urban) within 5 years from completion of work, the VAT must be applied necessarily to the extent of 22%.
On the property sale are also due to: the registration tax at a fixed rate of € 168 (€ 200 in 2014), the mortgage tax of 3% (a fixed amount of € 200 from 2014) and the cadastral tax of 1% (fixed amount of € 200 from 2014). If the property is sold by an individual person, the VAT tax is never applied, while the other tax is
payable in the amount of 7% for the registration tax (9% from 2014), 2% for the mortgage tax (a fixed amount of € 50 in 2014), and 1% for the cadastral tax (a fixed amount of € 50 in 2014). 4.2.1. Unique Municipal tax on real-estate Municipal tax on real estate (IMU) is payable by all individual and legal persons owning real estate (buildings and land). For more information see paragraph 2.3.3.
Lease
With a lease agreement one party conveys an estate in property to another party, for a limited period, subject to various conditions, in exchange for something of value, but still retains ownership. When the property is used for a business activity (21 Agricultural activity is excluded from this type of leasing property), both for corporation than self-employment, the contract lease is known as a commercial lease(22 The lease for commercial use is governed not only by the provision of the Code to a particular discipline (Articles 27-42 l.392/78, cd. Law on the equitable fee)). The minimum duration of the commercial lease contract is for 6 years, while the maximum is 30 years.
The commercial lease shall be written when:
- It is longer than 9 years: in this case it must be drawn up by public deed or private document with an authenticated signature under penalty of nullity;
- It is concluded with a Public administration In all other cases, although force freedom forms for registration purposes are necessary that the contract be drawn up in writing.
Procedure to lease a property
The property to lease must be suitable. With this purpose, the owner must provide a number of technical and administrative documents that attest to such as:
Technical-administrative Documents
Certificate of occupancy : To provide the proof of the property to the tenant agreed to use the owner must give the certificate of occupancy attesting that the viability of the property to certain legal and hygienic requirements;
Energy performance certificate (e.g. APE): Except when the property already has the certification who decide to lease it has to prepare the APE if:
– Will make an announcement commercial lease: property listings in the index of energy performance of the property reported in the APE;
– The property is located in one of the regions that provide for the obligation of the owner to surrender the APE at the time of conclusion of the contract and identify copy from the region itself and that on pain of economic sanctions: Among these regions will fall Also Italy;
– If it comes to buildings or units already equipped with EPA in the lease must include a clause in which the tenant claims to have already received an adequate information.
Tax aspects of the lease
All lease and rental contracts of real property instruments should be recorded. Registrations can be made either by the tenant (lessee) or the owner (lessor), whatever the amount of the agreed fee. The deadline for the lease registration is 30 days from the signing date of the contract or by the agreement (whichever is earlier), but if the duration of the contract does not exceed 30 days a year, you are not obliged to register the contract.
The lease agreement can be registered:
- In an electronically manner (online): that is a simple mode and allows for faster recording through the web site www.agenziaentrate.gov.it. All taxpayers who are enabled to telematic services with Fisconline can apply it, while it is mandatory for real estate agents and holders of at least 10 properties;
- with traditional methods (paper): It is necessary to visit a local Revenue office, fill out the Model 69 and after make the registration payment of the registration tax with F23 form. Both parties must calculate the tax and pay it to any collection agent, bank or post office. However, the taxpayers who choose the dry withholding tax regime must fill out the model 69, delivering it to the tax office and indicate in the model the choice of the new regime.
The registration payment fees and stamp duty for the contracts registration is required. The amount of the registration tax varies according to below:
Registration tax
|
PROPERTY |
PERCENTEGE |
|
Capital goods |
1% of the annual rent if the lease is undertaken by entities with a VAT position |
|
2% of the annual rent if the lease is undertaken by individual person |
According to Presidential Decree 131/1986. Rate update at 2013.
The stamp duty is due to for an amount equal to € 16,00 each 4 pages of the contract. The leasing contract of real estate assets provides a natural regime of exemption from VAT. However, you can give the option in the contract for the application of the tax, which will be due in the amount of 22% of the total of the royalties.