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Italy entices visitors from all over the world with its diverse and picturesque landscapes, tasty cuisine, and rich history. It is not a surprise that it is one of the most sought-after countries for foreigners to visit, invest in, and call home. The Italian real estate industry is a leader in both short-term rentals and long-term investments. Foreign entrepreneurs considering investing in Italian real estate will benefit from learning about the market’s numerous legal and commercial advantages.

Foreigners can buy, sell and rent out real estate without restrictions in Italy.

Statistics confirm the liquidity of investments: the price of residential real estate grows every quarter by an average of 1%. Five years ago, an apartment of 100 m² cost an average of €290,000, and today it is sold for €309,000.

How to Start a Property Business in Italy?

The most common way to establish a real estate company in Italy is in the form of a limited liability company, or specifically, either as a società per azioni (S.p.A.), or as a società a responsabilità limitata (S.r.l.), as these are regulated under Italian law. These types of commercial organizations are characterized by the company shareholders’ liability being limited only to their participation in the company. Hence, they are not held liable with their personal assets for debts of the company, exceeding the limits of their participation (to be determined by their percentage in the company capital). Several key steps are involved in establishing such a company:

  1. The drafting of the company Articles of Association;
  2. Collecting the required capital in a provisional bank account;
  3. Legalizing the Articles of Association by a notary and signing the company Constitutive Act; and
  4. Registering the company at the Italian Register of Companies.

Italian real estate opportunities are many, but it all depends on the final destination you choose. For types of properties such as those classified as hotels, bed and breakfasts, or farm holiday accommodations, specific certifications and permits may be required. At the conclusion of this process, the company can start its operations.

An Italian property management company is a company (either a partnership or a corporation) used as a vehicle for the management of income from real estate. A property management company is created for asset protection needs and to convey and manage for investment purposes the proceeds from the income (through leasing) of real estate.

Holding real estate (residential or commercial) on a personal basis may not be an optimal choice. Real estate investment, like all investments, is subject to certain risks, but the person investing may also find himself or herself at risk of losing his or her invested assets (perhaps in case of insolvency in the presence of land mortgages, personal creditors, etc.). For the need to protect the assets from personal aggression by third parties and to convey the income from putting real estate to income, the option of establishing a property management company may be considered.

This is an opportunity that must be carefully considered by each investor to weigh the advantages associated with the establishment of this corporate form with the aspects related to management costs. The real estate management company, depending on the case, can be established in the form of a partnership (in the case, the most commonly used form is the simple real estate company) or a corporation (in this case, the most commonly used form is the SRL).

Property Management Company in Italy: When and Why Open it?

1. The Assessments to be made when Setting up a Real Estate Investment Company in Italy

In order to identify whether it would be worthwhile to set up a corporation for taxation purposes, rather than as an individual, an assessment must be made. Basically, one must prepare a simulation of the taxation needed in both scenarios: that of the individual and that of the corporation. These are two different types of taxation, with different rules and considerations to be made. The aspect that may be important to point out is the variables involved that may shift the convenience of one choice over the other. Specifically, these are as follows:

  • Analysis with regard to the possibility of property disposal with a view to the future, including thinking about a future generational transition;
  • Assessment inherent in the person’s personal income without considering rental income;
  • Analysis concerning the indirect costs associated with the transfer of real estate to companies;
  • Assessment regarding the income obtainable from leasing, also in light of the regulations on shell companies.

2. Analysis of Investment in Real Estate in the Italian Market

The evaluations that must be carried out always involve a long-term view. The foreign investor is required to identify whether the Italian real estate investment he or she intends to make is a long-term investment or whether it is mere speculation, with the resale of the property in the short term.

A long-term investment usually involves assessments to be made in terms of generational transition as well. In fact, if one intends to invest in the short term in a property, investing as an individual (non-entrepreneur) is certainly the most convenient solution. In this way, a special tax regime can be taken advantage of that provides for capital gain exemption in the case of the transfer of property held for more than five years.

Read Also: What is the Highest Rated Investment Firm?

This same discipline applies to simple companies but does not apply to other partnerships and corporations. In the case of companies, any capital gains determined by the difference between the value contributed and the sale consideration will be subject to taxation in the hands of the company.

On the contrary, if a non-Italian investor assumes to make a long-term real estate investment (beyond ten years), considering the fact that a generational handover hypothesis could also take place, the contribution of real estate to a company can facilitate this. In fact, the contribution of real estate to a company allows a simpler procedure for the generational handover of assets. If the succession concerns not real estate but rather corporate holdings (partnerships or corporations), it is possible to avoid paying the mortgage and cadastral taxes that burden real estate succession.

3. Evaluation of Perceivable Rental Income

Another aspect to evaluate concerning the possibility of establishing a property management company concerns the amount of rental income that can be obtained from the investment. It is, in essence, a matter of assessing whether the profitability offered by real estate allows a company to operate.

A partnership or corporation has operating costs that impact the ultimate profitability of the investment. On the one hand, it is necessary to assess the income that the individual receives outside of the leases, and therefore the marginal rate at which this person would go to tax this income. In addition, it is a matter of identifying for which leases it is possible to apply for something called the dry coupon.

This IRPEF-substituted mode of taxing residential rental income (between individuals) is (usually) the most convenient taxation regime for individuals, with rates at 10 percent or 21 percent on the total rent (without the possibility of deducting costs). However, to be eligible to apply for the dry coupon, leases must be for civil residential properties (cadastral categories A1 to A11, except A10). In addition, the dry coupon is not applicable in the case of a simple property management company, nor the case of a property management SRL.

4. Evaluation of the Cost of conferring a property into an Italian Real Estate Company

A further assessment must be made in relation to the tax cost associated with the contribution of personally owned real estate to companies. This assessment must be made considering that when a partner contributes real estate to a company (partnership or corporation), registration tax is due at 9% for residential buildings, 7% for capital buildings, and 12% for land. 

In addition to the registration tax, mortgage, and cadastral taxes due on real estate should be taken into consideration. In addition, there are notary fees and ancillary costs associated with the transfer, such as the appraisal report that must be prepared by a professional (e.g., a Real Estate Italian Attorney).

Type of Real EstateRegistration TaxMortgage TaxCadastral TaxNotary Fees
Residential Building9%TBDTBDTBD
Capital Building7%TBDTBDTBD

5. Evaluation Linked to the Italian Regulation on Shell Companies

An additional often underestimated aspect in considering the opening of a property management company concerns the impact of the discipline on shell companies. The Internal Revenue Service aims to discourage Italian and non-Italian entrepreneurs from holding personal assets within shell companies. In fact, shell companies are companies that hold assets for the sole purpose of managing them, without performing any economic management of them. In practice, the tax authorities assume that for each property held, a certain amount of income must be earned by the company.

If the company does not reach the receipt of this income limit, the company is considered to be “shell company.” In practice, it is as if the company was established for the sole purpose of managing real estate on behalf of the partners, for their personal purposes, and not to generate income in the company.

Why Should You Start a Property Management Company in Italy?

An evaluation of the possibility of creating a property management firm is undoubtedly complex and differs by issue due to the numerous aspects involved. In light of the characteristics discussed above, corporate real estate management provides a number of challenges. However, before making a first selection, an investor should thoroughly understand the key benefits of corporate real estate management.

Asset protection

With corporate management, there is definitely greater protection of the investor’s assets. Protection resulting from the separation from the real estate whose ownership becomes mediated by participation in the company. For example, it will not be possible to suffer a real estate foreclosure but a movable foreclosure of the shares in the LLC or a real estate partnership. The benefit in terms of asset protection is not particularly significant, and better results could be achieved by establishing an estate trust or a trust.

Generational transition

Possibility of transferring part of the real estate through the notional share in the LLC with reduced tax costs compared to the individual transfer of real estate. Possibility to avoid gift or inheritance tax for lineal descendants or spouses even for assets exceeding one million euros in compliance with legal conditions. Control of the company with a shareholding of more than 50 percent for a period of at least 5 years by the donee or heir and continuation of the business activity in corporate form.

If, on the other hand, an International investor decides to invest in Italian property in a personal capacity, again there are advantages in the case of leasing real estate. These are advantages in terms of:

Property Taxation

Operating with a corporation, all profits will be subject to taxation on a tax return. On average, the taxation of a corporation is much higher than that of an individual. This is both because the individual can avoid taxation of capital gains from the sale of property held for at least five years. In addition, the natural person for rental income from residential property can operate for taxation by dry coupon. Which a corporation cannot apply.


A corporation has operating costs as well as incorporation costs. So for an LLC, there are costs for an accountant, if there are partners there will be the board of directors, and there are different items that you will have to govern and pay and these costs will erode the profit you make from operations. You have to consider these parameters because if you are a business owner you definitely have to control the outgoing costs. A sole proprietorship has very low outgoing costs compared to an LLC, but higher than direct management.

To get to the heart of the matter, let us start with a concrete case about an International investor who asked us for a legal consultancy. The starting situation is as follows:

“ I personally hold real estate in Italy (two apartments) that generates an annual gross income of 32,000 euros. This investment has enabled me to proceed with the purchase of two additional properties (through the taking out of a land loan) that I estimate will generate another 45,000 euros in gross income. In this situation, I would like to understand whether it may be worthwhile to continue to hold the properties personally as a private individual, or to establish a property management company”.

This is, in essence, a rather common situation to encounter

What is the Best Country to Start Real Estate?

Real estate investing can help you diversify your portfolio and earn passive income. With prices growing in many countries around the world, now may be a good moment to add global real estate to your investment portfolio. However, not all markets provide equal opportunity. However, some of the top countries for real estate investment are the United States, United Kingdom, Germany, Japan, Spain, Malta, Portugal, Panama, Brazil, and others.

1. United States

The US remains a premier destination for real estate investment, despite slowing growth in recent years. High demand stemming from domestic migration trends, combined with a shortage of housing inventory, suggests positive momentum moving forward. Key advantages include stability, transparency, and a wide range of market options. Investors should be selective and favor dynamic metro areas.

2. United Kingdom

Brexit chaos has pushed UK property values down and sterling weakness makes investment more affordable. London commands global attention but faces price resistance moving forward. Northern England’s “powerhouse” cities maintain momentum with young professionals.

3. Germany

Germany’s housing supply crunch paired with negative interest rates have transformed its real estate sector. Transaction volumes hit a record high in 2021, driven by foreign capital inflow. Germany offers stability and upside as Europe’s largest economy with a high quality of life.

4. Malta

This Mediterranean island nation offers EU residency rights and a coveted passport in exchange for investment in real estate. The Maltese property market is expanding rapidly amid a construction boom focused on luxury development. The scarcity of land plus rising prices should deliver healthy returns over time.

5. Portugal

Portugal’s Golden Visa program has sparked tremendous foreign interest in the country’s real estate market. Prices in cities like Lisbon and Porto have skyrocketed. But value plays can still be found by venturing outside the hot spots, while residency incentives sweeten the possibilities.

6. Panama

With excellent infrastructure, Panama City has become a magnet for multinational companies. Ongoing development and population growth ensure continued opportunities. Investors also benefit from a favorable tax regime and options like investor visas. But don’t overlook other parts of the country.

7. Brazil

Brazil rewards patient investors who can handle volatility. Sao Paulo and Rio remain investment hubs, but second-tier markets warrant attention moving forward. Demographics, urbanization, and a vast undersupply of housing buttress the bull case long-term.

8. Colombia

Colombia’s real estate boom keeps roaring on, fueled by expat demand and investor appetite. The multi-year trend of soaring property values shows little sign of abating. Bogota and Medellin are clear standouts, but Colombia’s Caribbean coast beckons as well.

9. France

Paris saw an 11% price jump last year, extending France’s real estate resurgence. Investors crave stability, scarcity value, and upside potential. Other hot spots include Lyon, Bordeaux, the French Riviera, and Provence. But new build homes qualify for tax breaks until 2024.

10. Canada

Canada’s real estate market has been on a tear thanks to ample immigration and tight supply. Investing north of the border provides stability and likely growth. Toronto and Vancouver lead the way, but Montreal and Calgary also warrant a look.


If you want to start a business in Italy or establish a real estate management company, our country offers a promising market. For British and Americans wishing to start a business in Italy, the country offers promising opportunities, particularly in tourism and real estate. Some business ideas in Italy for foreigners include purchasing, refurbishing, and reselling Renaissance buildings, establishing an agriturismo, starting a bed and breakfast inside a vineyard or at the base of a volcano, or just investing in commercial property.

For your first investment property in Italy, consider some alternative real estate investments like buying an olive grove, or farm and converting historical buildings into contemporary loft apartments. Many non-EU citizens opt to buy property in Italy through setting up a company to facilitate legal transactions. Projected to be popular areas for company formation in 2024-2025 are Rome, Milan, Tuscany and Liguria as some of the best cities to invest in real estate in Italy are Rome, Milan, Florence, Venice, Naples and Turin. Rome offers a mix of commercial and residential properties with good rental potential. Milan features a vibrant, investment-oriented real estate market. Florence and Venice attract strong tourism, a major driver of Italy’s economy, so properties here can yield robust returns, especially if used for short-term rentals.

For non-EU citizens, local knowledge is key to overcoming bureaucratic hurdles, but the rewards of owning real estate in Italy can be life-changing. With proper due diligence, Italy deserves consideration among the world’s best markets for real estate investing.

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