Purchase of real estate in Italy by Swiss nationals
Such a principle is set forth by Italian law, and imposes that a foreigner can exercise one of his or her rights in Italy, only if and to the extent that his or her State of origin allows an Italian citizen to exercise the same right under its own domestic law in its territory.
From an Italian-Swiss perspective, the principle of reciprocity is relevant due to the Swiss Federal Law on the Acquisition of Real Estate by People Abroad (Bundesgesetz über den Erwerb von Grundstücken durch Personen im Ausland, "BewG" or Lex Koller), which considerably limits the right of foreigners domiciled abroad to buy some real estate situated in Switzerland. Under Swiss domestic law, foreigners can purchase real estate in Switzerland only if certain requirements are met and in the presence of a specific authorization issued by the competent cantonal authority.
The principle of reciprocity under Italian law
Unlike Swiss law, Italian legislation does not provide for rules expressly limiting the purchase of real estate in its territory by foreigners. Nevertheless, any restriction existing under foreign laws comes to relevance in Italy under Article 16 of the so-called Preleggi al Codice Civile italiano (disp. prel. cod. civ.). This provision states as follows: "A foreigner is allowed to benefit from the civil rights attributed to a citizen based on a condition of reciprocity and subject to the provisions of special laws. This provision also applies to foreign legal persons".
Checking the reciprocity condition
Purchasing real estate in Italy requires a public deed and the public notary is required to ascertain the respect of the principle of reciprocity. Should the Italian notary have any doubt in this respect, he might ask for clarifications to the Italian Ministry of Foreign Affairs ("MAE"), which is competent to state on the respect of the condition of reciprocity in the domestic legislation of the foreign State concerned.
Such a verification is however not required for foreigners holding a long-term residence permit in Italy, or for foreigners holding a residence permit for employment or self-employment, for family reasons, for humanitarian reasons or for study, and for their family members.
Legal consequences of the lack of reciprocity
There is no common view about the legal consequences deriving from the conclusion of a purchase contract of real estate in Italy by a foreign national in contravention with the principle of reciprocity .
According to some Italian scholars, the lack of reciprocity would make the sale void, with no remedy. According to some others, by contrast, the lack of reciprocity would make the sale ineffective, being such a transaction not contrary to mandatory rules (art. 1418 of the Italian Civil Code). This ineffectiveness would operate within the Italian system only, but not abroad, and would last until reciprocity is later achieved.
The reciprocity condition from the Swiss-Italian perspective
Switzerland is part of the European Free Trade Agreement (EFTA), but has not ratified the Agreement on the European Economic Area (EEA). Therefore, its nationals are not like citizens of the EU Member States, although they can benefit from the right of free movement under the Agreement on the Free Movement of Persons concluded in 1999 between the European Community and the Swiss Confederation.
Under Italian law, therefore, a Swiss national meets the definition of "foreigner", and therefore the requirements established in the principle of reciprocity must be verified.
Like a foreigner (i.e. the Italian national) is subject in Switzerland to the restrictions provided for by the BewG, a Swiss national is subject to the same restrictions in Italy when buying real estate here.
It must be highlighted that in the MAE's view the condition of reciprocity with Switzerland is verified in respect of those sales of real estate in Italy, which in Switzerland under the BewG a foreigner might conclude without prior authorizations.
Direct purchase by Swiss individuals or through legal entities
Switzerland does not require any authorization for the purchase of real estate by Italian citizens resident in Switzerland and holding a Swiss C permit. Consequently, under the principle of reciprocity, there is no restriction under Italian law upon a Swiss national resident in Italy for the purchase of Italian real estate.
By contrast, due to the restrictions imposed by Swiss law, a Swiss national not resident in Italy can only purchase real estate in Italy as follows:
- secondary and holiday residences, and apartment-hotel dwellings, with a net living area not exceeding 200 square meters;
- plots of land, appurtenant to secondary and holiday residences (individual units: villas, buildings, etc.) with a surface not exceeding 1'000 square meters;
- buildings for sole commercial use;
In addition, the condition of reciprocity is verified for:
- legitimate heirs in purchases mortis causa and for relatives of the alienator in ascending and descending lines(grandparents, parents and children) and his/her spouse;
- Swiss legal entities only in respect of real estate to be used as the seat or establishment of the enterprise (main or secondary) or for productive purposes exclusively related to the economic activity carried on.
However, the principle of reciprocity for non-resident Swiss persons is not met in the following cases:
- if the purchase of the real estate consists of capital investment, except in the case of real estate for commercial use, which, even if carried out by non-resident natural persons, does not require authorization;
- if the intended use of the real estate is subsequently changed, thereby modifying the purpose for which the purchase was previously made;
- if agricultural land is purchased (which in Switzerland are subject to authorization).
Purchase through Italian legal entities
To conclude, it is worth analyzing the validity of the purchase of Italian real estate through an Italian legal entity owned by Swiss nationals.
Regarding the incorporation and participation in Italian companies, the MAE clarifies that the condition of reciprocity is verified and, therefore, no limitations for Swiss nationals apply. The MAE furthermore specifies that, owing to the similar restrictions existing under Swiss law, the reciprocity requirement is also met when a Swiss national is appointed as the member of the board of directors of an Italian company, except in the case of holding companies or the office of sole director. The MAE, however, does not provide any clarifications regarding real estate companies.
Concerning the constitution of and the participation in Italian partnerships, the MAE clarifies as follows:
- società semplice ("S.S."): the condition of reciprocity is met;
- società in nome collettivo ("S.N.C."): at least one of the partners must reside in Italy and must have, individually or jointly with the other resident partners, the authority to represent the company;
- società in accomandita semplice ("S.A.S"): at least one of the general partners must reside in Italy and must have, individually or jointly with the other resident partners, the authority to represent the company.
Consequently, considering, on the one hand, the admissibility for a Swiss national to set up a company under Italian law (lawful transaction) and, on the other hand, the admissibility for the Italian company to subsequently purchase the property (lawful transaction), one must conclude that in this case the principle of reciprocity would not be violated.