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Avoid Risks and Tax Fines on Your New Property in Italy

Tax Fines Italy

The buying process for a home in Italy is similar to that of other countries. You put your finances in order, make a plan for the down-payment, get pre-approved for a mortgage, and go real estate shopping! Once you’ve found the ideal home, the offer you make to purchase the property is called “Proposta” in Italian, and after some likely back-and-forth with the sellers, you’ll be ready to formalize an offer agreement.

Did you know that you are legally required to register your accepted offer on the house, or better yet the Preliminary Agreement if you have one, with the Italian fiscal authorities within 20 days of signing or else risk paying a fine for tax evasion? Unfortunately, many real estate agents in Italy are negligent in this area; they think it’s a mere tax compliance that the notary will sort out, but there is more to it. 

Why you should Register your Accepted Offer

If you fail to register the accepted offer several problems can arise. In the event the seller goes bankrupt before closing, you can enforce the contract in court and prevail over other creditors seizing the property only if you’ve registered it. A situation such as this is exceptionally risky when you are buying a property that’s a new construction from a builder, wherein it hasn’t been built yet or is still under construction. Not only will you lose the deal, but also your holding deposit and the broker’s commission you already paid! By Italian law, agency commissions are due as soon as the offer is accepted by the buyer. 

Imagine you are closing on a 1 million Euro property; you pay a holding deposit of 10% and an agency fee of 3% so 130,000 Euros total. If you do not register the accepted offer and the seller goes bankrupt, you risk forfeiting this entire amount!

Now, can you buy the house anyways if your agent did not register the contract? Provided the seller doesn’t go bankrupt or he doesn’t sell the house to someone else in the meantime– see our blog article on the importance of transcribing a Preliminary Agreement– the purchase of your home is not affected. The notary, however, will charge you a fine at closing, and let’s be honest, who likes to pay fines? 

How do You Register an Accepted Offer or a Preliminary Agreement in Italy?

The buyer and the real estate agent are both responsible for registering the accepted offer or the Preliminary Agreement, known as “Preliminare” or “Compromesso” in Italian, and paying the registration tax. This task can also be performed by the buyer’s accountant, but it’s important someone takes care of it. 

  1. Make an appointment online with the Italian Revenue Agency: “Agenzia delle Entrate”
  2. Fill out an F24 form for the payment of the “imposta di registro” tax and use the tax code 1550 as “codice tributo”
  3. Pay the tax online, at your local bank, or at the post office

How Much are Italy's Registration Taxes?

The amount of registration tax to pay when you buy a home in Italy is €200 fixed, plus 0.50% of the holding deposit that you paid to the seller. Bear in mind that the offer agreement must specify that the deposit be treated as “Caparra Confirmatoria,” or else it will be treated as an advance payment of the purchase price, and you will have to pay a hefty 3% “imposta di registro” tax when you register it instead of the aforementioned 0.50%. 

We recommend paying the registration tax at the post office, because they give you a payment receipt immediately. If you pay online, you will have to wait for the funds to clear which may take 2 to 4 working days. When the funds clear, you will be able to download the receipt of payment, or “quietanza” as it’s known in Italian. Without this “quietanza,” there’s no point to making an appointment with the Italian Revenue Agency as they won’t accept your documents.

Before you go to the appointment at the “Agenzia delle Entrate,” you will also need to purchase a so-called “marca da bollo” at your local “tabaccheria” or convenience store. It’s a tax stamp or fiscal stamp, which is an adhesive label used to designate collected taxes or fees on documents. The convenience stores only accept cash when you purchase one of these stickers. You will have to buy a €16.00 sticker every 100 lines, so if the offer agreement or “Proposta” is 150 lines long, for example, you will have to buy two stickers. If the proposta comes with an addendum page, the addendum page will require its own separate sticker.

Documents Checklist for the Italian Revenue Agency

  1. F24 form
  2. “Quietanza” receipt of payment
  3. Form 69 (“Richiesta di registrazione e adempimenti successivi”) filled out and duly signed three times by the buyer 
  4. Two or more “marche da bollo” stickers depending on the length of the document you intend to register
  5. Two original fully executed versions of the “proposta” (or “preliminare”)
  6. ID of the agent or person requesting the registration

It’s important to note that the Italian fiscal authorities will not register the contract unless you have the originals. Printed copies won’t do, so if the signing parties live abroad they must mail one another the original signed documents. 

If you are short on time and do not want to miss the 20-day deadline and incur fines, you may send a so-called “PEC” to the “Agenzia delle Entrate”; it’s a type of certified e-mail meant to provide the legal equivalent of the traditional registered mail. You will have to attach copies of all the documents listed above, along with a “Dichiarazione Sostitutiva di Atto di Notorietà” form, and then bring the originals in person once you receive them.

Fines Associated with Failing to Register the contract on-time

As specified at the beginning of this article, you have 20 days to register the contract of your accepted offer. If you are late, you will have to fill out a separate F24 form using the tax code  1551, and pay the following fine: 

  • After 20 days but within 50 days: 6%
  • After 50 days but within 110 days: 12%
  • After 110 days but within 385 days: 15%
  • After 385 days but within 750 days: 17.14%
  • After 750 days: 20%
  • Fines to pay after receiving notice of unsettled payment: 24%

You will also have to buy additional “marche da bollo” stamps bearing the amount of the fine on each sticker. Here is the exact amount that each additional sticker will have to show:

  • After 20 days but within 50 days: €1.6;
  • After 50 days but within 110 days: €1.78;
  • After 110 days but within 385 days: €2;
  • After 385 days but within 750 days: €2.29;
  • After 750 days: €2.67.

Following the example above wherein the offer agreement or “Proposta” is 150 lines long and has one addendum, in the event you register it within 3 months, you will have to buy 6X €16 + 6X €1.8 (you have to round up from 1.78) marche da bollo. Six for each original version, twelve in total. 

Fines for a Skipped Registration in Italy:

If this bureaucratic endeavor sounds daunting to you, you’ll probably understand why most offers in Italy don’t get registered, and the parties let the notary public apply the fines and take care of it. It’s worth noting, however, that the fine for a skipped registration range between 120% to 240% of the tax owed, and the notary public will also charge you €155 for the “marca da bollo”. 

If the purchase price of your new property is 1 million Euros and you pay a holding deposit of 10% so €100,0000, a typical registration tax would be €200 (fixed fee) + €500 (0.5% of the holding deposit) + €96 (for the “marche da bollo”) for a total of €796, provided you register the accepted offer on-time. 

Should you choose to skip the registration tax altogether, a maximum penalty of 240% of the tax owed could be enforced, wherein you’re looking at a fine of €1,835. While this amount may not seem like a lot in the grand scheme of things, the real risks in forgoing registration lie in the consequences of not having an official contract to protect your earnest money deposit, paid agency fees, and the rights to the title ownership of your new property. Contact us to have a licensed real estate agent assist you through the purchase and registration of a property anywhere in Italy.

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