Following the 2007 Budget (Finanziaria 2007), new legislation was passed in Italy to detect unregistered / incorrectly registered houses and buildings, in order to combat tax evasion.

Aerial and satellite photos were taken of several districts and superimposed to the existing, equivalent land registry maps. Farmers` applications for EU subsidies were compared with the data appearing at the land registry. As a result of these enquiries, which so far do not cover the whole territory of the Italian Republic, a total of 1,247,584 unregistered / previously unknown buildings came to light.

Additional irregularities were also detected. Several buildings still registered and appearing as farmhouses or outbuildings were found to have been illegally converted into villas and used for residential purposes rather than for farming.

Because unregistered buildings and farmhouses / outbuildings do not pay / are not charged Italian council tax (ICI - Imposta Comunale sugli Immobili), local income tax (IRPEF) or refuse collection tax, all this results in tax evasion. It is estimated that the Italian Revenue at national and local levels is currently losing almost 1.4 billion Euros a year because of these illegal buildings.

To correct this situation, lists of unregistered / previously unknown properties were produced in August, October and December 2007, and published on the Internet. Under legislation passed that year the owners of these “ghost / pirate” buildings, previously unknown and currently unregistered have been given seven months to register their properties.

On the other hand, owners of buildings currently classed as farmhouses or agricultural outbuildings but currently used as residential accommodation unconnected with farming (villas and cottages) have been given time up to the 28th July 2008 to apply (as it is their legal duty in Italy) for the registration of their change of use.

Where the residents of farmhouses no longer qualify under the strict and complex definition of “farmer” under Italian legislation, they have been given an extended term, up to the 31st October 2008 to own up, and correctly register their property, which technically is no longer a farmhouse or an agricultural building.

These deadlines are now very close, considering that registration of defaulting properties involves professional assistance of a local surveyor, or an engineer, etc. it takes time and the required procedure can be cumbersome and expensive.

There is an element of tax amnesty in this legislation, in the sense that mercifully, the applicable new, correct taxation will only be levied from the 1st January 2007 or, if later, one year from the date of construction.

Where the owners will not correctly and timely register their Italian properties, the local branch of the land registry will automatically have the power to register the buildings in any event and then to present the respective owners with the bill together with fines and penalties ranging from 258 Euros to 2,066 Euros per unit.

This however is only the tip of the iceberg, or the beginning of the story for the unfortunate, defaulting owners. This new legislation only deals with the land registry and tax problems. Nothing is said about the concurrent breaches of planning and building regulations, which will still be open to prosecution.

So, once the defaulting villa has eventually been registered and made tax compliant there is still the risk that it may have to be demolished, because after all, it is still in breach of planning and building regulations.

Another reason to be careful when buying your Italian property !

Dr Claudio Del Giudice

Copyrights reserved - 23rd June 2008