REAL ESTATE - Real estate firms and leasing companies operating in Italy will lose out under a draft law that removes tax relief on commercial property transactions involving structured finance, according to rating agency Standard & Poor’s.
In the past, companies could offset VAT debits against credits gained in procuring goods and services. As a result of Decree No 223, which comes up for discussion in September, companies will no longer be able to recover transfer tax paid on commercial real estate.
Moreover, the draft law “may” require them to repay VAT deductions made on real estate before the introduction of the law.
S&P claims that “the provisions laid out by the decree could increase transaction costs and thus negatively affect supply-and-demand dynamics”.
In a statement, the agency said that the new tax liabilities “could affect certain issuers, borrowers and originators in structured finance transactions. The higher costs associated with the originators’ possible tax liabilities could be passed on to borrowers, leading to deterioration in borrower credit quality and reduced ability to repay leasing instalments.”