Today, the government will possibly propose a voting process on its economic package. This will include the real estate tax. Analysts said that this aims to push through the package in the face of a raft of opposition amendments.

An analyst who has noted the presence of Morgan Stanley and Deutsche Bank in the country has highlighted that the new tax would place Italy on a bad situation for the international investors. The analysts insisted that investors would never invest in Italy if this happens.

According to the analysts, the new transfer tax on real estate deals will push total real estate deal taxes to 6.0-7.0%. This is much higher compared to the European average of 3.3%. The UK is second with highest at 4.5%.

On the other hand, Value Added Tax (VAT) is widely neutral on the real estate deals. However, it would take two more years to recover. The tax includes much higher financing cost than in other European countries. In Europe, repayments are quicker.

If the confidence vote would pursue within the day, the tax decree will be implemented next week. 
Once the tax becomes law, real estate companies would possibly make a statement on their exposure and the impact on 2006 earnings.

The other week, Pirelli & C Real Estate SpA announced that while it continues look at growth in its activities in the current year, it has refused to make a full year forecast before the tax legislation is approved.

By M. Sese
http://realestatepress.org