Because the Italian Land Registry is organized into two separate sections, one dealing with the legal title to properties (Registri Immobiliari) (which is always up to date) and a second, dealing with administrative matters relating to buildings generally and plans (Catasto) (which regrettably is months if not years out of date), frequently buildings / new extensions are not registered at the Local Land Registry (Catasto) in Italy. These buildings are thus unknown to the Italian Authorities and effectively evade Italian taxes on properties.

Recent Italian legislation has addressed this problem and the authorities are now catching up with evading / defaulting owners. The problem with this legislation is that it may catch innocent foreign buyers, who having bought a defective property, are totally unaware that their villa is an abuse and a form of tax evasion in Italy. In these cases, immediate action is always recommended.

Owners of land in Italy, on which buildings / extensions are erected are under a legal duty once work is completed, to report the new building / extension to the Local Land Registry (Catasto). Recent legislation appointed an authority (Agenzia del Territorio) in charge of Catasto, to make enquiries, detect defaulting owners, and in case registration of the defaulting building or extension is not completed within a stated time, to proceed to compulsory registration at the expense of the defaulting owners.

Typically, Agenzia del Territiorio carried out these searches by comparing the Catasto maps relating to buildings with aerial photographs of the same area. Over 1,500,000 new / unregistered buildings were detected.

After detection, defaulting properties were listed under the relevant local authority (Comune) district and such lists were published on the internet, at the local Town Hall and In the Official Gazette (Gazzetta Ufficiale). In total, six long lists were published between August 2007 and December 2008.

Within the following seven months owners must register their unregistered buildings / extensions with the Catasto, whether they are actually responsible for the abuse, or they acquired defaulting buildings from the previous owners. If no action is taken, Agenzia del Territorio will proceed in the owner’s absence, with compulsory registration. At the same time, evaded tax, fines and all the compulsory registration charges will be levied.

This will take the form of an Italian tax assessment and may come as quite a shock for the owner, especially any foreign owner who may not have the benefit of knowledge of the breach and of the publicity this legislation is currently attracting, in Italy.

In all cases it is cheaper to buy wisely, with the assistance of an Italian lawyer and a local surveyor, so that the problem is detected at an early stage and the necessary action is taken by the vendor, at the vendor’s cost, before the property is bought.

If however the foreign buyer has not carried out appropriate searches at the time of acquisition and has even a passing suspicion that all may not be well at the Catasto with his Italian property, now is the time to check.

If upon checking at the Catasto any irregularity is detected, or if the Italian property is actually listed as a result of the recent investigations, it is necessary to proceed with great urgency to prevent or even stop compulsory registration procedure in its tracks. You should register your defaulting villa or extension, now.

It has been reported in the Italian press that voluntary registration of irregular buildings and extensions, is always cheaper than compulsory registration by the Agenzia del Territorio. Registration should be carried out voluntarily and immediately, and the Agenzia del Territorio should be immediately notified, to avoid further action and penalties.

“A stitch in time saves nine”.