What are the tax obligations for an Italian investor purchasing real estate in the United Arab Emirates?
How does taxation change for an Italian investor who decides to purchase property in the United Arab Emirates?
What declarations, taxes and fulfillments should an Italian investing in real estate in Dubai or another emirate consider?
Understand Italian taxation on foreign real estate investment
When an Italian investor purchases real estate in the United Arab Emirates (UAE), it is critical to understand that if he or she resides for tax purposes in Italy, this investment will fall under the "worldwide income" principle. In practice, Italy requires residents to declare all income earned abroad, including income from real estate (rents, capital gains).
Precisely, rental income, capital gain on sale, and the value of property abroad can enter the Italian tax return, and may be subject to tax. For example, IVIE (Imposta sul Valore degli Immobili situati all'Estero) tax may be due for property owned abroad for Italian residents.
In addition, although there is no personal income taxation for individuals in the UAE (or at least it is very low), this does not exempt the Italian investor from obligations in Italy: if one is a tax resident in Italy, Italy claims taxation on foreign income.
What specific obligations should be considered by those who invest from Italy in the UAE
First of all, you need to check your tax residency status: if you are considered tax resident in Italy, you have to file your tax return including foreign investments and real estate abroad, and you may have to pay IVIE.
Second, you need to check if there is a double taxation treaty between Italy and the UAE: in this specific case, there is the convention between the Republic of Italy and the United Arab Emirates that covers income taxes and capital gains.
Third, local tax and registration costs in the UAE should be taken into account and how these are reflected in Italian taxation (e.g., rental income in the UAE should be reported in Italy, with the possibility of tax credit if taxed abroad).
What tax strategies and shrewdnesses to adopt to manage the investment effectively
To reduce tax risks, it is important to plan from the outset how the investment will be managed: whether or not the property will be rented out, whether it will be sold, in what manner. Knowing and structuring the purchase vehicle (individual, company, trust) can make all the difference.
It is also useful to foresee together with an Italian and local tax advisor in the UAE the future implications: for example, the sale of the property will lead to a capital gain that needs to be assessed both in the UAE and in Italy. Being non-resident in Italy also changes the taxation picture.
Finally, maintaining clear accounting, transparent records and qualified assistance is essential to avoid litigation, penalties or unexpected costs.
Why choose REMA Living Real Estate to manage the tax aspects of your investment
In REMA Living Real Estate, we don't just find real estate: we accompany you in the complete tax assessment of your investment in the UAE. We are familiar with both the local real estate market and the Italian obligations of a foreign investor, and we work with tax professionals who speak your language. Our approach is ethical, transparent, and geared toward building real and lasting value, not just numbers. By relying on us, you minimize your risks and maximize the peace of mind and effectiveness of your investment.
A common-sense tip for international real estate investment
A good tip: Don't consider taxation as a marginal element of the investment-it is an integral part of the strategy. Even if a property in the UAE appears "tax-advantaged," if you are not clear on how Italian and local taxation will be handled you may be faced with unexpected costs or lower than expected returns. Take the time to listen, analyze, plan with a long-term view, compare scenarios, and choose qualified stakeholders.
