When it comes to buying real estate abroad in places like Italy, many future owners like foreigners have a lot to consider as there are risk and many things to consider. Because of this many tend to lean towards the purchase of property with a company to give a sense of security, it is called The Italian S.r.l (Societa a Responsabilita Limitata). it is important to know before and after a purchase what difference this is to individual property ownership.
Foreign buyers are frequently told that an Italian S.r.l. will protect their assets, simplify their estate and reduce their tax. For most residential purchases, none of those three propositions survives contact with the Italian statutes. This article sets out what the law actually provides, and where the company route does earn its place.
What an Italian S.r.l. actually is?
The società a responsabilità limitata is a limited liability company, governed by art. 2462 to 2483 of the Civil code (Capo VII, Titolo V, Libro V, as replaced by D.Lgs. 6/2003 with effect from 1 January 2004). It is incorporated by public deed before a notary and registered with the Registro delle Imprese.
This requires a share capital that may not be less than €10,000 (art. 2463, co. 2, n. 4, c.c.). It may, however, be fixed anywhere between €1 and €9,999.99, provided the contributions are made in cash and paid up in full to the directors at incorporation (art. 2463, co. 4, c.c.); in that case at least one fifth of annual net profits must be set aside to the legal reserve until capital and reserve together reach €10,000 (art. 2463, co. 5, c.c.). Hence there are many factors that needed to be account before one purchase and even after the purchase of a property.
The difference between company and individual property ownership, and why foreigners tend to choose company property for security?
Limited liability, and its exceptions
The società a responsabilità limitata (S.r.l) is governed by art. 2462 to 2483 c.c. Art. 2462, co. 1, which states the protection in full: for the obligations of the company, only the company is liable, with its own assets. It is a rule with exceptions.
- The sole quota holder. – On insolvency, a person who has held the entire quota answers without limit for obligations arising in that period, where contributions were not made under art. 2464 c.c. or the filing under art. 2470 c.c. was omitted (art. 2462, co. 2). Foreign buyers are routinely advised into a single-shareholder S.r.l.; this exception was written for them.
- The directors. – Art. 2476 c.c. imposes liability towards the company and, for wrongful or negligent conduct, towards creditors and third parties. Where the owner is also sole director, the two hats do not double the protection.
- Shareholder funding. Art. 2467 c.c. subordinate’s shareholder loans to other creditors and claws back repayments made in the year before insolvency.
- The bank. A lender financing property held by a newly incorporated company with nominal capital will require a personal guarantee. The largest liability sits outside the shield.
The reciprocity conditions
Art. 16 of the disposizioni preliminari admits a foreigner to the civil rights granted to citizens on condition of reciprocity and extends the rule to foreign legal persons — so a foreign company buying directly faces the same test. The check is dispensed with for EU and EEA nationals, and for non-EU nationals lawfully resident in Italy on a carta di soggiorno or a qualifying permit (D.Lgs. 286/1998; D.P.R. 394/1999, art. 1); a bilateral investment treaty, where in force, operates as lex specialis. If contested, the foreigner must prove reciprocity (Cass. civ., sez. III, n. 12978/1995). The Ministry’s country tables cover participation in Italian companies as well as the purchase of property, so the S.r.l. is no automatic answer.
The purchase: prezzo-valore
Under art. 1, co. 497, of L. 266/2005, where residential property is transferred to an individual not acting in a business, artistic or professional capacity, and the buyer so requests before the notary, registration, mortgage and cadastral taxes are computed on the cadastral value determined under art. 52, commi 4 and 5, of D.P.R. 131/1986 — irrespective of the price, which must still be stated in the deed. It does not apply to VAT-able sales.
The cadastral value of an Italian home is usually well below what a foreign buyer pays for it. This is the largest single saving in an ordinary purchase, and the provision speaks only of persone fisiche. A company cannot have it. An individual pays registration tax at 9%, or 2% where the “prima casa” conditions are met, on that reduced base; a company pays 9% on the price, with no relief. Where the seller is a construction company selling within the statutory period, VAT applies instead; whether a corporate buyer recovers it depends on the activity it carries on.
The immobile patrimonio (art. 90 TUIR)
Residential property (category A, other than A/10) held by a company, neither instrumental to its business nor stock in trade, is an immobile patrimony, and art. 90 TUIR which produces two results:
First, the income is not what the property earns but what the cadastre says it earns: the rendita revalued by 5%, increased by one third where the unit is held at disposal (art. 41 TUIR); or, if rented, the higher of that figure and the rent less up to 15% of documented ordinary maintenance. An empty villa generates taxable income in every year in which nothing happens to it.
Second, is that art. 90, co. 2, denies deduction of expenses, other negative items and depreciation. A renovation of several hundred thousand-euro shelters nothing. The only carve-out is interest on acquisition borrowing (art. 1, co. 35, L. 244/2007).
The non-operating company regime (art. 30, L. 724/1994)
This regime exists to discourage the società di mero godimento — a company whose function is to hold assets for its shareholders. That is the structure the buyer has been sold. Where revenue falls below a presumptive threshold derived from the value of the assets held, the company is attributed a presumed minimum income and a minimum IRAP base, bears a 10.5% IRES surcharge (art. 2, co. 36-quinquies, D.L. 138/2011), and has its VAT credit restricted.
Three developments matter. Art. 20 of D.Lgs. 192/2024 halved the coefficients from 31 December 2024; the parallel “perdita sistematica” regime was repealed by art. 9 of D.L. 73/2022; and in C-341/22 (7 March 2024) the Court of Justice held the VAT limb incompatible with Directive 2006/112, so it must be disapplied absent fraud or abuse. One detail repays attention: the entities listed in art. 30, co. 1, do not include the società semplice.
Reselling Property
An individual is taxed on the gain only where the property is sold within five years of purchase or construction (art. 67, co. 1, lett. b), TUIR). Property acquired by succession is excluded outright, as is a unit that served as the principal residence of the seller or of his family for the greater part of the period between acquisition and sale. Building land is always taxable. Where the property was received by gift, the five years run from the donor’s acquisition.
A separate rule, lett. b-bis), introduced by L. 213/2023, taxes the first disposal of property on which works benefiting from the Superbonus under art. 119 of D.L. 34/2020 were completed within the preceding ten years (Agenzia delle Entrate, circolare 13/E of 13 June 2024).
A company has none of these shelters. Every gain is business income under art. 86 TUIR, whether the property is sold after two years or after twenty.
Succession: no shelter for the estate
Two questions are routinely conflated: which law governs the succession, and which state taxes it. The S.r.l. answers neither.
For deaths on or after 17 August 2015, Regulation (EU) 650/2012 designates the law of the deceased’s habitual residence at death, unless he has chosen the law of his nationality (art. 21 and 22). Where Italian law governs, the forced heirship rules at art. 536 ff. c.c. apply, and the quota simply takes the place of the property in the estate.
As to tax, art. 2, co. 2, of D.Lgs. 346/1990 charges Italian inheritance tax on assets situated in Italy where the deceased was non-resident, and co. 3, lett. b), deems quotas in companies seated, administered or principally active in Italy to be situated in Italy. The charge survives the structure. What changes is the asset valued — the quota, under art. 16 of the Testo Unico — so that company debt reduces the base. Rates and franchises are at art. 7 of that Testo Unico as replaced by D.Lgs. 139/2024. Art. 3, co. 4-ter, exempts transfers of controlling shareholdings to descendants or the spouse, subject to a five-year holding requirement; whether it reaches a pure property-holding company is contested and should not be assumed.
Privacy
The proposition that a company conceals ownership does not withstand examination. Quota holders of an S.r.l. are recorded in the Registro delle Imprese (art. 2470 c.c.) and are publicly searchable; the company files its accounts annually (art. 2478-bis c.c.); and beneficial ownership must be reported under art. 21 of D.Lgs. 231/2007 and D.M. MEF 55/2022. Individual ownership is equally a matter of public record: the deed is transcribed in the registry mobiliary and the owner appears in the catasto. The company route substitutes one public register for another. The beneficial ownership register (UBO – Ultimate beneficial system), suspended pending a reference to Luxembourg, was upheld by the Court of Justice on 21 May 2026.
When the company does make sense
Development and resale, where the property is stock in trade (art. 92 TUIR) and the art. 90 problem disappears. A genuinely operated letting business. Co-investment among unrelated investors, where the statute supplies the governance that co-ownership does not. Entity-level non-recourse debt. Ring-fencing a real commercial risk — a hospitality operation, not a house somebody lives in.
The comparison between Individual and company
| Individual buyer | Italian S.r.l. | |
| Taxable base on purchase | Cadastral value, on request | Price. Prezzo-valore unavailable. |
| Rate on purchase | 2% “prima casa”, otherwise 9% | 9%. No “prima casa” relief. |
| Income while held | Cadastral income; cedolare secca on renting | Notional income even if empty (art. 90 TUIR) |
| Costs and renovation | Not deductible; no tax beyond cadastral income | Not deductible (art. 90, co. 2) |
| Shell-company regime | None | Minimum income, 10.5% IRES surcharge (art. 30, L. 724/1994) |
| Gain on resale | Exempt after five years | Always business income (art. 86 TUIR) |
| Getting the asset out | Not applicable | Taxed. Relief until 30 Sept 2026. |
| Succession | Italian tax on the property | Italian tax on the quota |
Conclusion
Individual ownership and company ownership are two different matters that foreigners or individuals need to think about before any property purchase, as it is important to understand how both can be beneficial but also have cons. As Corporate ownership of Italian real estate is a structure for a business, and Italian law is candid about that. Where the property is a home, the company converts reliefs designed for individuals into charges designed for companies and offers in exchange a protection narrower than it appears — one the lender will require to be personally guaranteed anyway. Decide before the preliminary contract is signed. At AL AdvaLux, we advise international clients on matter of real estate law that can be complex when it comes to purchasing property in Italy.