Buying a property in Italy via a limited company

If you’re buying Italy real estate, why not go down the limited company route. You’ll not be surprised to hear that we’re talking about avoiding paying tax on your Italian property, but this is a complex area. It’s potentially very remunerative though. You can buy a home in Italy via an Italian company, a company registered in your home country or state, or you can go offshore. All, you won’t be surprised to hear, have advantages and disadvantages.

Buy your home in Italy via an Italian company

You can buy your villa or apartment in Puglia or Piedmont via an Italian company, and these take a number of forms. There is the SNC (societa in nome collettivo) a partnership with unlimited liability; an SAS (societa in accomandita semplice) which is a limited partnership with your liability limited to the capital you invested; The SAPA (societa in accomandita per azioni) is a partnership exposing the managing partners to unlimited liability; the SPA (societa per azioni) is an incorporated limited liability company; while the SRL (societa a responsibilita limitata) is a private company with your potential liability limited to your share within it.

To those of us who just want to buy a house in Italy but not learn company law, the first trip should be to the commercialista (local lawyer/accountant expert in Italian tax law) who will advise you on the setting up of the right company to suit your needs, balancing risk and potential profit.

Buy your home in Italy via a UK or US company

You can buy Italy real estate via a company in your home country, but it’s unlikely to be the most tax-efficient plan (though there is the advantage of minimising profits in the home country company by using them against the purchase and thus avoiding tax). Your UK or US solicitor or lawyer will be able to steer you on this one.

Putting your Italy real estate in an offshore company

The dollar, pound or euro signs flash up when we think about putting Italian property in an offshore company, but slow down … it doesn’t mean you can avoid paying tax altogether. Again, the appeal is the avoidance of inheritance taxes and that’s certainly the case in Italy at the moment. But if you are an income tax payer, then the main country of residence (be it Italy, the UK or the US) may look at your status as a director of this offshore company and tax you accordingly. In the UK that could mean paying higher rate tax of 40% (or at the least, corporation tax at 19% or above). Non-taxpayers should fare better, but there are other considerations.

Having acquired your property in Italy, and placed it within the shell of an offshore company, you may think the business is done. But consider: tax legislation changes yearly (at least) and any future gains can be swept away with a stroke of the Government’s pen. Spain and France have already negated the tax benefits for offshore ownership and, with harmonisation of EU tax legislation, the same could soon happen with Italy. Another option is to buy with family or friends.