Real estate management in Italy and the tax advantages for those who decide to invest in the “Bel Paese”

a cura del dott. Paolo Gaeta

member of International Academy of Estate and Trust Law


The società semplice (s.s.) guarantees perfect property management.

The mere enjoyment, as a non-commercial activity, is only permitted through s.s; article 2249 of the italian Civil Code governs the rules laid down for the s.s.

I. What is the advantage of setting up a real estate simple partnership?

S.s. protects real estate and manages it in the best possible way.

These include:

– Fewer bureaucratic formalities

– Flexibility in the organization of relations between partners and administrator

– Tax advantages

– No minimum capital is required for incorporation (Article 2253 of the Civil Code)

– In s.s. can be conferred any type of good or service

– The company does not produce taxable business income, it’s a conduit company

– The s.s. does not have to keep company books, nor does it have to draw up and file annual accounts

– The s.s. does not need a shareholders’ meeting

– You need at least two partners (natural persons or legal entities also from a foreign country)

The s.s. presents a customized management discipline. The partners can write the company statute with great discretion. This company is characterized by the unlimited and joint personal liability of all the partners for the company’s obligations.

The personal liability of shareholders, who have not acted in the name of the company, may be excluded by a special agreement. The agreement must be brought to the knowledge of third parties, under penalty of the ineffectiveness of the agreement.

The s.s. does not constitute a person with is own tax autonomy. Its income is imputed to the partners and is determined according to the rules provided for natural persons.

The income is calculated according to the rules for natural persons.

The fact that the shares of the s.s. may be held by foreign companies is relevant from a tax planning perspective.

The income of the ordinary partnership is transferred to the foreign parent company without being subject to withholding tax in Italy.

II. What is the fate of the income that the simple partnership derives from the sale of real estate it owns?

There is no capital gain tax in case of selling real estate (other than building land) owned for more than five years.

This means that if at the time of the sale (if it takes place after five years) a capital gain results, the sums received and distributed to the partners will not constitute taxable income.

If that gain is then distributed in the hands of the partners, there is no imputation for transparency in the hands of the partners either, whether they are natural persons or companies.

Can such a sale generate taxable income for the foreign company as a partner in the simple partnership?

In the case of a sale of an apartment, for example, by a s.s., two cases may arise: (i) the sale for consideration relates to property acquired or constructed ‘not more than five years ago; (ii) the sale for consideration relates to property acquired or constructed ‘more than five years ago.

In the first case, the capital gain arising from the difference between the purchase and selling price generates income subject to taxation.

In the second case, the capital gain is not taxed. It follows that, in the latter case, the prerequisite for the application of the tax in respect of the ordinary partnership that effected the sale is lacking, with the consequence that such income cannot be imputed even to the shareholders for transparency, whether they are natural persons or legal persons. These rules also apply where the partners of the ordinary partnership are foreign.

The Italian Revenue Agency has ruled along these lines, which, in its answer to Interpretation No. 691 of 8 October 2021, clarified that income included in the amounts that will be allocated to the partners upon dissolution of the ordinary partnership is not taxable to the extent that it derives exclusively from the sale of real estate units owned for more than five years.

Contact us for more information and to set up your s.s. to buy a property in Italy:


dott. Paolo Gaeta

Member of International Academy of Estate and Trust Law