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Tuesday, 28 June 2011 03:36

In July 2007 the Finance Act (Finanziara budget Law 296) took effect in Italy authorizing their version of Real Estate Investment Trusts (REIT) -- the Societa di Investimento Immobiliare Quotate or SIIQ. They are under the supervision of the Bank of Italy and Consob, and governed by Civil and Tax law. Italian REITs must generate at least 80% of their income from rental properties and distribute at least 85% of their income to shareholders. So long as they abide by these guidelines, a SIIQ's income from property rentals is exempt from IRES (Corporation Tax) and IRAP the regional taxes which are 3.9%. A SIIQ must be either: a S.p.A. (Societa per Azioni) -- which a joint stock company in Italy for tax purposes or a corporation from outside Italy. All SIIQ shares must be traded on a regulated European exchange. No shareholder may own more than 51% of the voting rights or right to receive profits. 35% of the shares must be owned by shareholders with no more than 1%. Any non-rental income the Italian real estate investment trust receives (up to 15% is allowable), including capital gains from sale of property, is taxed at the ordinary corporate rate of 27.5%. Ordinary real estate companies that wish to convert to SIIQ status must pay 20% tax on unrealized capital gains. They must have a minimum of 40m Euros in capital, and "SIIQ" must be part of the company name. Capital gains are taxed the same as any other real estate company. Shareholders are subject to having 20% withheld from their dividends.

Last Updated on Tuesday, 12 July 2011 05:48