Purchase of real estate in Italy by Swiss citizens.

Buying real estate in Italy for Swiss citizens

The purchase of real estate in Italy for Swiss citizens is subject to the condition of reciprocity, which means that a Swiss citizen can acquire property in Italy only if an Italian citizen can do the same in Switzerland according to Swiss law. This condition is part of a bilateral agreement between Italy and Switzerland signed in 1999. As will be seen later, compliance with these conditions is key to the purchase, although there are alternative options that allow for "bypassing" the restrictions.

Koller’s Law in Switzerland

In Switzerland, the possibility of purchasing real estate by foreign citizens is regulated by special laws. In particular, reference is made to the so-called "Koller Law" (from 1983). This provision states the following: "A foreign citizen wishing to buy a house in Switzerland must request permission from the cantonal authorities, and the property to be acquired must meet certain parameters, including a living area of less than 200 square meters, and it must not have more than 1000 square meters of adjacent land." This provision is justified by the restriction on the purchase of real estate in Switzerland by foreign citizens, which leads to a decrease in the number of potentially purchasable properties and, consequently, an increase in their prices. As will be seen later, this provision is reflected in Italian legislation regarding the so-called "principle of reciprocity."

The principle of reciprocity

Italian legal regulation, unlike the Swiss one, does not explicitly impose restrictions on the acquisition of real estate by foreign citizens on its territory. However, restrictions that may exist in foreign jurisdictions play a role in Italy based on Article 16 of the Preleggi to the Italian Civil Code. This provision establishes the principle of reciprocity and states the following: "A foreigner is allowed to enjoy civil rights granted to a citizen, provided that there is reciprocity and subject to the provisions contained in special laws. This provision also applies to foreign legal entities."

Conditions of reciprocity

• Permission for acquisition: Not required in Italy
• Reciprocity check: Required; verification by the Italian Ministry of Foreign Affairs
• The role of the notary in checking the condition of reciprocity: The condition of reciprocity must be verified by an Italian notary involved in the real estate transaction. When a Swiss citizen intends to purchase property in Italy, the Italian notary plays a crucial role in verifying the condition of reciprocity. This verification is necessary to ensure that the purchase complies with the norms established by the reciprocity agreement between Italy and Switzerland. The condition of reciprocity, as mentioned earlier, guarantees that Swiss citizens can acquire property in Italy only if there is equal treatment for Italian citizens wishing to purchase property in Switzerland. In practice, this means that the notary must ensure that an Italian citizen can acquire property in Switzerland under the same conditions as a Swiss citizen wishing to purchase property in Italy. If the notary identifies a violation of the condition of reciprocity, they are obliged not to proceed with the sale. This is because a transaction that does not comply with the condition of reciprocity may be deemed invalid and unlawful (meaningless). Furthermore, the notary may also seek assistance from the Italian Ministry of Foreign Affairs to ensure compliance with all conditions. This verification is an integral part of the purchasing process to ensure the legality and validity of the real estate transaction.

ATTENTION!For Swiss citizens looking to purchase real estate in Italy, it is important to be aware of these restrictions and to ensure that their purchase complies with current legislation. In case of doubts or for additional information, it is advisable to consult a lawyer or a real estate specialist who specializes in such cross-border transactions.

The application of the principle of reciprocity between Italy and Switzerland

Switzerland, a member of the European Free Trade Association (EFTA), has not joined the Agreement on the European Economic Area (EEA). Consequently, Swiss citizens are not treated as European Union citizens in Italy, although they enjoy freedom of movement due to the 1999 agreement between the then European Community and Switzerland. This means that in Italy, Swiss citizens are considered "foreigners." This status implies that their civil right to purchase real estate in Italy is subject to a reciprocity check. The above allows for a more detailed examination of the opportunities and limitations related to real estate purchases in Italy by Swiss citizens.

The purchase of real estate in Italy by Swiss citizens or Swiss companies

Swiss citizens can purchase in Italy:

• Secondary housing or residential units in apart-hotels, provided that the net living area does not exceed 200 square meters;
• Land plots that are part of secondary housing and residential premises, with an area of no more than 1000 square meters;
• Real estate intended exclusively for commercial use;
• Real estate inheritance by heirs in the event of a foreigner's death and relatives of the seller in direct and reverse relations, as well as by their spouse.

However, there are restrictions.

The condition of reciprocity is not checked for Swiss citizens in the following cases:

• Acquisition of real estate for investment/financial purposes;
• Purchase of agricultural land (permission required).

It's important to noteA Swiss citizen purchasing real estate in Italy without complying with these conditions risks having the purchase declared invalid. The Italian notary, with the support of the Italian Ministry of Foreign Affairs if necessary, is required to verify all conditions before finalizing the sale.

The purchase of real estate in Italy by Swiss citizens through Italian companies

One of the cases that should be evaluated is the situation of Swiss citizens acquiring real estate in Italy through an Italian company. According to the Ministry of Foreign Affairs, the condition of reciprocity is met even if a Swiss citizen uses an Italian company.

As for the creation of limited liability companies, there are no particular issues. However, the Ministry clarifies that a Swiss citizen has the opportunity to hold the position of a board member. However, there are restrictions on being appointed as the chairman of the board or the sole executive body.

Regarding the establishment of a simple partnership of the Italian type by a Swiss citizen, it is important to provide some clarifications:

• Simple partnership: the condition of mutuality is fulfilled;
• A limited partnership: at least one of the partners must be a resident of Italy. They must have the authority to represent the company either individually or jointly with other residents.

The creation of simple type Italian companies by an Italian citizen should be carefully evaluated. In fact, to establish a simple partnership, at least two participants are required, as well as the possession of assets in Italy, including through companies, which serves as a "link" to Italy for determining the tax residency of the actual owner. This should be assessed thoroughly, especially in cases where the time spent in Italy is significant. In such cases, according to Article 2 of the TUIR, the days spent in Italy over a certain period are counted for determining physical presence in Italy for tax residency purposes. Therefore, it is important to carefully evaluate your personal situation and make the best decision considering your personal goals.

Conclusions

The purchase of real estate in Italy for Swiss citizens involves certain restrictions and the condition of reciprocity. The restrictions mainly concern the area and use of the property. However, there are ways to circumvent these restrictions, such as relocating to Italy or establishing an Italian real estate company. These options should be carefully evaluated considering the tax implications. This applies to both Italian national tax legislation and the double taxation agreement with Switzerland.

If you are a Swiss citizen (without Italian citizenship) and plan to purchase real estate in Italy, you will face certain restrictions. Additionally, when buying property in Italy, there is an obligation to pay indirect taxes both at the time of purchase (notarial transaction) and annually (for example, property tax and TARI). Therefore, it is important to carefully consider each investment decision to assess its tax burden. If the purchase is made through a company, whether Swiss or Italian, the tax implications of such a purchase should be evaluated.

It is also important to consider anti-avoidance measures and the connection to Italy for tax residency. Therefore, it is crucial to assess your situation and investment project in Italy with the help of a tax consultant specializing in international tax law, so that nothing is left to chance.

Frequently Asked Questions

Can I buy a house in Italy as a Swiss citizen without any restrictions?In general, there are restrictions on the area of housing and the use of real estate. However, these restrictions can be circumvented by moving to Italy or by establishing an Italian real estate company.

Is a permit required to purchase real estate in Italy?A purchase permit is not required in Italy, but a check on the condition of reciprocity was conducted.

What does the condition of reciprocity mean?This means that a Swiss citizen can purchase real estate in Italy only if there is a bilateral agreement allowing Italian citizens to acquire property in Switzerland under similar conditions.

What happens if I want to purchase real estate that exceeds the established limits?You can move to Italy or set up an Italian real estate company to bypass the restrictions.