Transfer of an ETS Property Before Five Years: Are the Tax Benefits Preserved?

With Ruling No. 134/2026, the Italian Revenue Agency clarified a recurring issue for Third Sector Entities (ETS) that own real estate: what happens if a property purchased under the tax relief provided by Article 82(4) of the Third Sector Code is transferred before five years have elapsed from the date of purchase?

The provision allows registration, mortgage and cadastral taxes to be applied at a fixed amount of €200 each, provided that, at the time of the transaction, the entity declares its intention to use the property directly for its institutional purposes and that such use begins within five years of the transfer. The only grounds for forfeiture of the benefit are a false declaration and failure to use the property directly within the five-year period. The subsequent transfer of the property is not listed among them.

The case examined concerned a foundation that had purchased a property in Genoa in 2022 and immediately used it as its operational headquarters. In 2026, due to changing organisational needs, the entity had to consider either selling the property to third parties or leasing it and using the rental income to fund its institutional activities—in both cases before five years had elapsed from the purchase.

The Revenue Agency confirmed that the five-year period is not a minimum holding requirement, but rather the maximum period within which the direct use of the property must begin. Where the property has been genuinely and continuously used for institutional purposes from the date of purchase, its subsequent sale—even before the expiry of the five-year period—does not result in the loss of the tax benefit already secured.

The same principle applies where the property is leased to third parties, provided that the lease is preceded by a genuine period of direct use. Otherwise, the tax benefit would still be forfeited.

However, it should be noted that the registration tax relief does not amount to a full tax exemption. For income tax purposes, a sale within five years may still give rise to a taxable capital gain classified as miscellaneous income under Article 67(1)(b) of the Italian Income Tax Code (TUIR). The capital gain is equal to the difference between the consideration received and the purchase price, increased by any related costs, pursuant to Article 68 of the TUIR.

Finally, the Tax Administration retains its power to verify the property’s actual instrumental nature and direct use for institutional purposes, which the entity must always be able to substantiate with appropriate documentation.

Tax & Legal Research Hub

Centro Studi e Pianificazione Fiscale

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Dott. Valerio Locatelli

Coordinatore

Dott. Giancarlo Marengo