Restoring a property in Italy for business purposes
Renovate commercial properties
Commercial renovation in Italy primarily focuses on the ownership and starting of a real estate business in Italy, along with how to effectively conduct interior design in commercial properties and real estate investment. The real estate business in Italy is one of the country’s biggest and fastest-growing industries. Despite economic downturns during the pandemic, this industry is still growing.
How to start a real estate business in Italy
Establishing a real estate company in Italy is most commonly in the form of a limited liability company, either as a società per azioni (S.P.A.), or as a società a responsabilità limitata (S.R.L.). Additionally, these are chosen because stakeholder liability is limited to the shareholder’s engagement in the company, meaning they are less at stake in case of liability.
Creating this type of company involves several steps, including drafting the company Articles of Association; collecting required capital in a local bank account; legalizing the Articles of Association by a notary; signing the company Constitutive Act; and registering the company at the Italian Register of Companies. There are also some more specific permits that may be required depending on the activity of the business, whether it is a hotel, B&B or other type of property.
If the company also decides to register a trademark, the holder of the trademark must submit a formal application for registration to the Italian Patent and Trademark office. The registration of a trademark is valid for 10 years, as of the application filing date, and can be renewed indefinitely every 10 years only within the territory of the Italian Republic.
Many entrepreneurs consider the innovative SME and startup programs offered by the Italian Ministry of Financial Development to gain financial backing for the real estate purchase. This applied to both innovative SMEs and innovative start-ups.
In Italy, an Innovative SME is classified as a business that fits the following criteria: Italian residence or production residence; its last financial statement is certified; it is not listed on a regular market; and it is not simultaneously registered as an innovative startup. Likewise, innovative startup criteria includes R&D expenses of at least 3% of the higher value of its turnover and cost of production; employs highly qualified personnel with PHDs; and, the owner or licensee has at least one patent or is the owner of a registered software.
These types of companies can access tremendous tax incentives and benefits, as well as different exemptions and access to funding. It is for this reason that we recommend entrepreneurs and foreigners starting a commercial real estate business in Italy investigate these two business models, as it has tremendous benefits.
Interior design for commercial properties
After starting a business, foreign entrepreneurs in Italy can start to realize excellent returns if they are able to find the right property and design it well. Therefore, interior commercial design is so important. Hotels, B&Bs, agriturismos and other holiday locations need to be restored and designed well to meet client demands and expectations. This often means designing with traditional and local Italian styles in mind and working with local Italian textile and material suppliers to go for traditional or contemporary looks, and using artisanal and hand-crafted local features and pieces in the design process.
It is, however, important to keep each property’s cultural characteristics and environmentalism in mind as this can lead to even further benefits, greater sustainability, more unique looks, and greater returns.
Real estate business investment in Italy
If a foreign entrepreneur is not looking to start or build a real estate business in Italy, they do have the option to invest in real estate businesses. Real estate investment includes investing in warehouses, residential buildings, land, shops, and other types properties that relate to real estate in Italy.
This is something that entrepreneurs can take on easier than starting a business, so it is a great start for many entrepreneurs. However, investors need to be aware of the costs associated with real estate investment in Italy. The main costs include Notary expenses; registration, mortgage, and cadastral taxes when purchasing; agency fees; restructuring and furnishing fees; technical expenses; and bank charges.
Notary expenses typically range between 1,500 to 2,000 Euro but depends on the rates set in each different territory. A registration tax is the tax paid on the cadastral value of the property. It is calculated depending on whether the property is a first or second home, with the rate being 2% for a first home, and 9% for a second home.
Mortgage and cadastral taxes are simpler than registration taxes and are simply a set rate of 50 euros. Agency fees, much like Notary fees, are determined by each individual real estate agent or agency. They typically range between 2% and 4% (although it can be higher) of the property’s price.
Restructuring and finishes costs are often the greatest cost for investors. This is because it includes all of the reconstruction, furnishing, and designing of the property after purchase. Any costs that are incurred during the renovation of a property are classified as restructuring costs. Technical and evaluation costs are simply the appraisal costs that are incurred by getting property evaluations from specialists such as engineers, surveyors, architects, and other professionals.
The final cost are bank charges. These are present when loans are used on commercial properties. When a loan agreement is made with a bank, there are fees (interest, transaction fees, etc.) that are incurred. These are important to note, as many people purchasing property in Italy have to take out a loan to purchase and invest in real estate.
Knowing and carefully tracking these expenses allows investors to track the performance of their investment via their Return on Equity (ROE) and Return in Investment (ROI). The ROE is a ratio of the equity paid out compared to the profit achieved; whereas the ROI pertains to the ratio of the profit earned and capital invested.
Our services for renovation of commercial properties
Our team of experts can help navigate the complex area of commercial renovation and commercial real estate. Whether you are looking to create a company to build a real estate company, investing in existing real estate, buying, or renovating and redesigning real estate, there are many requirements that must be met.
With our team of expert lawyers, agents, and other real estate professionals, we can help you find, finance, buy, and invest in commercial real estate in Italy, no matter your country of origin. We can help walk you through visa applications and how to start a real estate business as a foreigner; and provide clarification on how to purchase and invest.
We’ll also work with you during renovations or restructuring to track your costs, plan taxes, and ensure that you achieve the best possible ROI and ROE on your investment.
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