1. INVESTING IN
MEDITERRANEAN
REAL ESTATE
ITALY
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2. SUMMARY
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A. RECENT DEVELOPMENTS IN ITALIAN REAL ESTATE LEGISLATION (slides 3-7)
• Project Bonds
• Disinvestment of real estate public properties
B. DOING BUSINESS IN ITALIAN REAL ESTATE (slides 8-12)
• Overview
• Asset Deals
• Share Deal
• Opinion on the best structure and fiscal impact: main keys
C. MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE (slides 13-21)
• Real Estate listed companies – SIIQ
• Real Estate funds
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3. A - RECENT DEVELOPMENTS IN ITALIAN REAL ESTATE LEGISLATION
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The Italian Government has recently passed new legislation to stimulate – inter
alia - the growth of the real estate sector and to implement the disinvestment of
Italian public real estate properties. The measures are part of a national plan
aimed at attracting private and institutional investments – both resident and not.
Further, the Government has introduced new instruments to finance
infrastructural investments called ‘project bonds’ in order to transfer a variety of
public real estate properties, so confirming that Italian closed-end real estate
funds represent the most efficient vehicles for institutional non-resident
investors.
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4. A - RECENT DEVELOPMENTS IN ITALIAN REAL ESTATE LEGISLATION
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PROJECT BONDS
With reference to the new measures for economic growth and in order to
identify the best way to encourage the development of infrastructures, the
Legislative Decree No. 1, dated 24th January 2012, concerning “Urgent
provisions on competition, development of infrastructures and competitiveness”
(enacted by an amendment to Law No. 27, dated 24th March 2012, better
known as the “Liberalization Decree”), has introduced several changes to the
Italian Public Contracts Code with the purpose of increasing public-private
partnerships.
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5. RECENT DEVELOPMENTS IN ITALIAN REAL ESTATE LEGISLATION
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PROJECT BONDS:
MAIN CHARACTERISTICS
a) Project bonds can be issued either by SPVs incorporated under Art. 156 of the
Italian Public Contracts Code or by Public–Private Partnerships (PPP);
b) Project bonds can only be subscribed by qualified investors such as: banks,
pension funds, insurance companies, undertakings for collective investments,
others institutional investors, and large companies with specific prerequisites (at
least two of the followings: a turnover of 40 million Euro upwards – Total
balance sheet of 20 million Euro upwards – equity of over 2 million Euro).
Furthermore, the State, as well as all public bodies, is entitled to become
investors, even if under certain conditions;
c) The economic rights of subscribers (the repayment of face value amounts on a
certain date and the periodic interest payments) can be guaranteed by the
financial authorities.
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6. A - RECENT DEVELOPMENTS IN ITALIAN REAL ESTATE LEGISLATION
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PROJECT BONDS:
TAX OVERVIEW
i. Project bonds are assimilated to Italian government bonds with a substitute
tax of 12.5% to be applied on the periodic interest payments;
ii. For foreign investors (residing in “white list” countries) the periodic interest
payments are exempt from any Italian taxation;
iii. A fixed amount of registration, mortgage and cadastral taxes (Euro 168.00)
shall be applied to securities.
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7. A - RECENT DEVELOPMENTS IN ITALIAN REAL ESTATE LEGISLATION
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DISINVESTMENT OF ITALIAN REAL ESTATE PUBLIC PROPERTIES
In order to reduce public debt and stimulate the real estate sector, the Italian
government has decided to accelerate the divestment of public properties.
The process of privatization of public real estate assets started 20 years ago, but
only now it seems that there is a specific plan to finalize it. The aim of the latter
is, indeed, to reorganize and enhance the stock of public properties.
One of the most suitable vehicles to streamline investment in public real estate
properties is the real estate closed-end fund. (Art. 36 of the Legislative Decree
No. 58/1998).
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8. B - DOING BUSINESS IN ITALIAN REAL ESTATE
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OVERVIEW
Italian real estate investments can be realized in different ways:
• Asset deals:
o purchase of real estate properties, or
o acquisition of a going concern (i.e. “azienda”); according to Art. 2555 of
the Italian Civil Code, is the “complex of assets organized by an
entrepreneur for the exercise of an enterprise”.
• Share deal: acquisition of real estate properties through the purchase of the
corporate vehicle which owns them.
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9. B - DOING BUSINESS IN ITALIAN REAL ESTATE
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ASSET DEAL: ACQUISITION OF REAL ESTATE PROPERTY
Usually, in Italy, the acquisition of real estate property occurs in 4 stages:
1. negotiation and signing of a letter of intent;
2. legal and technical due diligence;
3. negotiation and signing of a preliminary purchase agreement (i.e.
“compromesso”) which may contain, inter alia, the conditions precedent
(which shall be fulfilled within the execution of the purchase deed) and all
legal and commercial terms the property shall be transferred;
4. signing of the purchase deed before the public notary.
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10. B - DOING BUSINESS IN ITALIAN REAL ESTATE
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ASSET DEAL: ACQUISITION OF A GOING CONCERN
The acquisition of a going concern occurs in accordance to the provisions of the
Italian Civil Code. The parties negotiate and regulate the agreement, the assets
(including real estate properties) and all liabilities related to the going concern in
the case of a sale and purchase of the latter.
Some of the provisions of the Italian Civil Code are mandatory, others can be
expressly derogated by the parties.
Article 2556 of the Italian Civil Code sets forth that the acquisition of a going
concern shall be made by means either of (i) a notarial deed or (ii) a private
deed legalized by the public notary.
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11. B - DOING BUSINESS IN ITALIAN REAL ESTATE
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SHARE DEAL
The investment in real estate must be made through the acquisition of a
corporate vehicle.
In Italy the most used types of corporate vehicles are:
• limited liability company (i.e. “S.r.l.” or “società a responsabilità limitata”;
• join-stock company (i.e.: “S.p.A.” or “società per azioni”,
• limited partnership (i.e.: “S.a.s.” or “società in accomandita semplice”).
Quotas/shares methods of transfer:
• Limited liability company and limited partnership quotas: by means of a
written agreement.
• Join-stock company shares: by means of endorsement (i.e. “girata”), (but
usually the parties enter into a written agreement).
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12. B - DOING BUSINESS IN ITALIAN REAL ESTATE
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OPINION ON THE BEST STRUCTURE AND FISCAL IMPACT: MAIN KEYS
• which kind of vehicle is the most suitable?
• VAT – Registration TAX etc.;
• Tax cost on the payment of dividends – taxation on the capital gain, etc.
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13. C - MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE
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• Real Estate listed companies – SIIQ (“Società di Investimento Immobiliare
Quotate”)
• Real Estate closed-end funds (for collective investment in real estate
properties) – SGR (“Società di gestione del risparmio”)
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14. C - MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE
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REAL ESTATE LISTED COMPANIES - SIIQ
GENERAL OVERVIEW
- Introduced in 2006;
- Legal form: listed companies;
- Minimum market capitalization: 40 mio
- Regulatory restriction: subject to specific Bank of Italy regulations and
supervisions
- Investors restriction: no shareholder owing more than 51% - at least 35% of
shareholdings held by shareholders <2%
- Main activity: lease
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15. C - MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE
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REAL ESTATE LISTED COMPANIES - SIIQ
TAX ASPECTS
Exemption from Corporate tax (IRES and IRAP) for the lease activity;
20% of the profit will be withheld at the distribution of profits
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16. SIIQ
Lease activities (internal
management)
Listed market
C - MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE
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REAL ESTATE LISTED COMPANIES – SIIQ - STRUCTURE
Participants /
Quotaholders
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17. C - MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE
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REAL ESTATE FUNDS
GENERAL OVERVIEW
- Introduced in 2003 (the tax law);
- Legal form: closed-end funds;
- Minimum market capitalization: not required;
- Regulatory restriction: subject to specific Bank of Italy regulations and
supervisions;
- Investors restriction: more than one;
- Main activity: real estate activity (lease – development);
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18. C - MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE
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REAL ESTATE FUNDS - STRUCTURE
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19. C - MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE
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REAL ESTATE CLOSED-END FUNDS
Real estate closed-end funds shall invest exclusively or mainly (for an amount
equal to not less than two thirds of the fund's total value) in:
• property;
• property rights, including those arising from real estate lease agreements
aiming the transfer of the property and from real estate concession rights;
• equity interests in property companies;
• equity interests in other Italian and foreign real estate closed-end funds.
The above mentioned limit (2/3) is reduced to 51 % when the value of the assets
is invested in measure not less than 20% in financial instruments deriving from
securitizations of property, property rights or mortgage-backed receivables.
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20. C - MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE
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REAL ESTATE CLOSED-END FUNDS: TYPES
Various kinds of real estate closed-end funds exist. In particular:
• Funds based:
• on «contributions in kind»: in case quotaholders transfer their own
properties in exchange for the participations in the fund, and/or
• on equity, in case quotaholders purchase the participations in the fund
for a price;
• Reserved funds: if they are reserved to - qualified investors (banks,
investment companies, public bodies, etc.);
• Retail fund: not reserved to qualified investors;
• so-called «ordinary funds»: which respect the limits established on a general
basis in the prudential rules for limiting and spreading risk issued by the Bank
of Italy;
• Hedge funds: which shall invest in assets, including assets different from
those specified for the real estate closed-end funds, by way of derogation
from the prudential rules for limiting and spreading risk issued by the Bank of
Italy. 20

21. C - MAIN INSTRUMENTS OF THE ITALIAN REAL ESTATE
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REAL ESTATE FUNDS: TAX ASPECTS
Tax Aspects (for foreign investors)
Exemption from corporate tax (Ires and Irap);
Unlike the case of join stock companies the value added produced by the fund is
not subject to any Italian taxation
The taxation occurs only at the time of distribution
Please note that:
i. the distribution of profit to foreign pension funds or undertakings for
collective investments or sovereign funds, located in the so-called “white
list” countries, are exempt from the application of any withholding tax and,
ii. under certain conditions, the withholding tax could be applied at a limited
rate, if provided by the treaties against double taxation signed between Italy
and the Country of residence of the foreign investor of the fund. In this
latter case a withholding tax of 10% for the majority of EU countries (and
also Russia China, the USA and Canada) would be applied. 21

22. THE FIRM
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CBA Studio Legale e Tributario was formed following the merger between
Camozzi Bonissoni Varrenti & Associati and Studio Associato LCA – Avvocati e
Commercialisti d’Impresa, two important firms boasting consolidated experience
in the provision of legal and tax consulting services to both Italian and foreign
companies investing operating in Italy.
Whit more than 120 professionals operating in offices in Milan, Rome, Padua,
Venice and Munich, CBA provides its clients with high-value services through a
partner-led-approach. We offer solutions that are tailor made to satisfy market
demands.
CBA consolidates the international identity of the founding firms, relying on
close-knit relations with various foreign firms and international networks while
retaining its independence as Italian firm.
We pursue our international strategy by foreign relationships with leading firms
by establishing solid co-operations with local entities and through the
secondment of our professionals.
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23. THE FIRM
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KEY POSITION IN THE REAL ESTATE SECTOR
Over the years, CBA has earned a key position in the real estate sector, boasting strong capabilities and
specialized knowledge and recognized as a leader in this market. Our inter-disciplinary approach and full
range of services covers all aspects of multi-use real estate, including residential, office, shopping
centers, tourism/hotels, ports and inter-ports and alternative energy plants.
Our clients include Italian real estate companies, national and foreign institutional investors, real estate
funds and asset management companies.
The real estate law department has developed specific skills in structuring and carrying out the
purchase, management and sale of commercial, residential or industrial property portfolios of all sizes,
using the most efficient tax structures.
Key areas of expertise include:
• acquisitions, disposals, optimization and development of real estate equity held by public
administrations, social security institutes, pension funds, real estate closed end funds, institutional
foreign fund (SIF – SICAV – etc) and religious entities;
• acquisitions/sales of real estate companies and/or real estate portfolios;
• the processes involved in constituting mutual real estate investment funds devoted particularly to
the development of infrastructures;
• the regulatory processes involved in gaining authorization to provide collective asset management
services from the Bank of Italy, for asset management companies operating in the sector of mutual
real estate investment funds;
• the process involved energy plants both at national and international level;
• Tax rulings , agreements between the taxpayer and the Tax Office, tax disputes The Firm also assists
companies before the Court of Cassation and, if necessary, the Court of Justice.
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24. Dott. Francesco Assegnati
24
20122 MILANO
Galleria San Carlo, 6
Tel. +39 02 778061
Fax +39 02 76021816
E-mail:
milano@cbalex.com
00196 ROMA
Via Flaminia, 135
Tel. +39 06 80913201
Fax +39 06 8077527
E-mail:
roma@cbalex.com
35137 PADOVA
Galleria dei Borromeo, 3
Tel. +39 049 8775811
Fax +39 049 666086
E-mail:
padova@cbalex.com
30135 VENEZIA
Santa Croce, 251
Tel. +39 041 2440266
Fax +39 041 2448469
E-mail:
venezia@cbalex.com
D-80539 MÜNCHEN
Ludwigstrasse 10
Tel. +49 (0)89 99016090
Fax +49 (0)89 990160999
E-mail:
muenchen@cbalex.com
francesco.assegnati@cbalex.com
www.cbalex.com
The content of the presentation cannot be applied as legal counselling as this will
always be subject to actual and specific knowledge of the client’s situation.