Business property loans in italy

Business property loans in italy

Italy’s alluring landscapes, rich cultural heritage and lifestyle attract millions of visitors every year. Consequently the country also attracts foreign entrepreneurs interested in investing in a property-based business, such as a hotel, B&B or holiday home..

Pondering their options buyers often ask themselves what financing options they could profit from. Can a non-Italian purchaser looking at setting up a hospitality business in Italy manage to get funding from  an Italian Bank? What is the smoothest, most hassle-free way to obtain financing? Whom can you refer to?

First and foremost: all foreign non-resident investors, whether individuals or companies who intend to purchase real estate in Italy aiming to turn it into a commercial property in the hospitality field should keep in mind that they are entitled to apply for a mortgage. There is no law which forbids foreign investors from getting a mortgage from an Italian bank. On the other hand, prospective buyers also need to consider that Italian banks tend to be quite cautious in granting mortgage loans, 

Having local insight, and being able to count on trustworthy onsite advisors who can assist with the red tape, is the key to success. Mainly because there are steps a prospective investor can take to increase his/her possibilities of obtaining a mortgage and other financial support

There are two vital factors that make the difference: being an Italian resident and incorporating an Italian commercial entity. Italian banks are traditional institutions, not commercial ones, and thus tend to play it safe when signing off mortgage contracts is implied. This said, applying for, and obtaining, a mortgage is undoubtedly easier for Italian residents, who also have the option to pursue certain tax exemptions.

Consequently, it is absolutely advisable (not to say necessary), that foreign nationals and/or companies interested in buying property in Italy with the aim of operating in the hospitality market establish an Italian commercial entity. By doing so, in fact, buyers are able to obviate the residency issue because when a non-resident sets up a company in Italy – for example an SRL, a Limited Liability Company) – its legal headquarters are in the country, and thus the company itself is automatically an “Italian resident”.  At that point the owner can easily apply to an Italian bank for a mortgage on behalf of the company. 

Also, when looking into the most fruitful options for incorporating a company in Italy, investors should bear in mind that the Italian government and Revenue Office offer incentives and special tax dispensations for foreign nationals who decide to relocate to Italy and/or establish their business in the country. For example those known as the “Tax incentives for attracting human capital in Italy”, such as fiscal benefits for teachers and researchers who move to Italy and incentive tax regimes for new residents and high-net-worth foreign nationals who change their tax residence to Italy. 

As regards newly created companies the Italian government allows for tax benefits and administrative incentives for the establishment of innovative startups, and periodically issues other benefits for companies set in a certain location.

There are a variety of types of companies one can establish in Italy, ranging from structures with a sole proprietor to, generally larger, businesses which comprise shareholders. Choosing the type of business structure to establish depends entirely on the investor, his/her budget allowance, liability and risks’ evaluation, desired size of the future company, preferred/required number of employees etc…

To open a business activity in Italy the administrator must register with the Business Register (Registro delle Imprese) managed by the Chamber of Commerce (Camera di Commercio) in charge of the area where the business is located. Registration in the Business Register is compulsory for all investors who aim to: 

  • produce goods and/or service of goods and services
  • act as mediators in the distribution of merchandise
  • provide transportation (for people and/or goods=)
  • operate in financial activities such as banking and insurance provision
  • operate in the agricultural field (optional under a certain output)

An investor who intends to buy property with the aim to operate in the hospitality business will, once in activity, be providing services. As such his/her business must necessarily be listed in the Business Register. 

In addition to registration in the Italian Business Register company incorporation procedures also comprise:

  • issuing and assembling the company regulatory articles of and memorandum 
  • executing the articles before a public notary
  • applying for an Italian tax code (Codice Fiscale)
  • opening an Italian bank account
  • registering for a VAT number (Partita IVA)

Once the company founder has decided which type of business structure is the most suitable for his/her purposes and needs, and starts undertaking the above steps, he/she shall be required to commence the company formation process. 

The main documents necessary to incorporate a commercial entity in Italy are:

  • Identification documents of the shareholders/final beneficiaries 
  • Evidence of the source of the money used for financing the incorporation of the commercial entity in Italy (Balance Sheet/Tax Return)
  • Proof of headquarters – evidence of the Italian location of the businesse’s head office 

Once the company is founded and established its legal representative may promptly submit a mortgage application to an Italian financial institution. 

The main documents an Italian company is required to get together to apply for a mortgage are:

  • The extract of the Italian commercial entity’s corporate registry, as issued by the competent local Italian Chamber of Commerce;
  • The extract of the foreign mother company’s corporate registry (if applicable, i.e. if the Italian company has been incorporated by a foreign undertaking)
  • The official Business Plan, proving that the commercial scheme is unquestionably sustainable under Italian financial standards

Evidently all the above documents are fundamental, but we wish to underline that presenting a well-drafted, accurate and creditable Business Plan is absolutely crucial to a positive outcome of the mortgage application.

Whether setting up a brand new business or opening a branch of a foreign company, establishing a company in Italy has legal, fiscal and bureaucratic requirements which may turn into hitches and snarls. On the other hand there are positive loops, and profitable contingencies, which can turn out to be really good breaks for prospective entrepreneurs and corporate companies. What’s the key to proceeding flawlessly, and reaching one’s goal quickly and dexterously? 

Having skilled, reliable, and straight-to-the-point professional assistance on-site, in Italy.

Our Services

Comprising proficient and highly-skilled lawyers, accountants and real estate developers, our pool of experts assists foreign investors through all steps and phases of company incorporation and financing requests, guaranteeing professional service, reliable advice, and adroit assistance every step of the way.

What we can provide:

  • preliminary evaluation of the investment’s financial sustainability;
  • commercial property research: we assist you in sourcing the most suitable property to purchase;
  • assistance with the incorporation of the Italian branch, comprising collection of the necessary documents, translation into Italian, legalization by apostille, opening of a bank account, dealing with VISA issues when and if required;
  • assistance with the preparation of the mortgage application to be sent to a couple of Italian banks;
  • experienced assistance with drafting of the necessary business plan;
  • dealing with potential problems in terms of transfer pricing, movement of funds and any additional problems that may arise.

Contact us