Real Estate Investments in Italy made by foreign investors: FOREIGN COUNTRY  Direct investment Investment through Italian Real Estate Investment Fund (REIF)  Investment through Italian company RE Co. REIF ownership income

 RE Co.  REIF DirectThrough Italian companyThrough Italian REIF IN ITALY: Income from Italian real estates is subject to taxation in Italy with progressive rates (from 23% up to 43% plus local surcharges up to 2,6%) in case of individuals, or to a 27.5% rate in case of other entities; Italian taxable income from ownership of Italian real estates is determined as follows: taxation on the higher among 85% (75% in specific cases, such as Venice) of the actual rent and cadastral income, if the asset is rent; cadastral income increased of 1/3 if the real estate is held vacant and/or available; no taxation if the asset is the main residence of the owner or of its relatives; 19% of interest due for the purchase of the main residence can be offset (up to the amount of Euro 760 per year) against the Italian income tax; individuals may opt for a substitute taxation regime with a rate of 20% for rents on civil buildings; obligation of filing a tax return in Italy. IN THE FOREIGN COUNTRY the relevant treaty to avoid double taxation on income between Italy and the State of residence of the foreign investor, if any, may exempt the Italian real estate income already subject to taxation in Italy or acknowledge a tax credit to be offset against taxes applied in the State of residence on said income. IN ITALY: Dividends and interest paid by Italian companies to foreign subjects are subject to a 20% (*) withholding tax in Italy; in case of dividends, the following favorable regimes may apply: (i) withholding tax exemption on payments to certain UE companies holding at least 10% of the equity share capital of the Italian company, to investment funds and SICAVs, to real estate funds, to pension funds; (ii) withholding tax rate reductions are acknowledged to EU resident shareholders (rate of 1,375%) or may be granted to other shareholders benefiting from treaties to avoid double taxation on income providing lower rates (generally ranging from 10% to 15%; the relevant Treaty may provide specific rules for real estate companies); in case of interest, the following favorable regimes may apply: (i), withholding tax exemption on payments to certain UE companies holding at least 25% of the equity share capital of the Italian company, in case of loans; (ii) withholding tax rate reductions may be acknowledged to other lenders benefiting from treaties to avoid double taxation on income providing lower rates (generally ranging from 10% to 15%; the relevant Treaty may provide specific rules for real estate companies); (*) rate applicable starting from 1 January 2012 IN THE FOREIGN COUNTRY … IN ITALY: Proceeds distributed by REIFs are subject to a final 20% withholding tax in Italy; exemptions from said withholding tax is acknowledged on proceeds received by: (i) pensions funds; (ii) collective investment undertakings established into white list countries; (iii) international entities or bodies established pursuant to international agreement executing in Italy; (iv) central banks or bodies which manage also the Italian State official reserves; withholding tax rate reductions may be acknowledged to other unit holders benefiting from treaties to avoid double taxation on income providing lower rates (for these purposes, the Italian Revenue deems that proceeds distributed by REIFs qualify as interest). IN THE FOREIGN COUNTRY … Ordinary income in the hands of the foreign investor

Italian companyREIF Italian companies are subject to corporate income tax with a rate of 27.5% (IRES) and to regional tax on producing activities with a rate of 3.9% (IRAP) : for IRES purposes only, interest on financings is deductible up to 30% of EBITDA net of extraordinary items of income (no limitation for interest due: 1. by real estate management companies; 2. on financings secured by mortgages given on the real estate asset to be purchased and destined to be rented out); for IRES and IRAP purposes: (i) real estate strategic business assets can be depreciated with linear deductible depreciation (in general over 33 years), related maintenance costs are fully deductible, can give raise to a presumption of minimum income deriving from said assets (varying from 0.9% up to 4.75% on the relevant cost); (ii) portfolio assets can be devaluated for tax purposes; (iii) other estate assets are deemed producing income as higher between the cadastral rent and 85% (75% for real estate in Venice) of the actual rent and related maintenance costs are not deductible. REIFs are not subject to taxation on income produced by their assets. Ordinary income in the hands of the Italian entity

 RE Co.  REIF DirectThrough Italian companyThrough Italian REIF IN ITALY: Income from the disposal of Italian real estates held for less than 5 years is subject to taxation in Italy with progressive rates (from 23% up to 43% plus local surcharges up to 2,6%), in case of individuals, or to a 27.5% rate in case of other entities; the taxable capital gain in Italy is determined as difference between the sale price and the purchase cost; obligation of filing a tax return in Italy; alternatively to the above, the seller may opt for a substitute taxation regime with a rate of 20% on the capital gain. IN THE FOREIGN COUNTRY the relevant treaty to avoid double taxation on income between Italy and the State of residence of the foreign investor, if any, may provide the irrelevance of the capital gain for Italian tax purposes or, alternatively, may provide a tax credit to be offset against taxes applied in the State of residence on the income already subject to taxation in Italy. IN ITALY: Capital gains realized on non qualified participations into Italian companies (for non listed companies, 20% of ordinary voting rights or 25% of the net worth) are subject to a 20% substitute tax in Italy(*); Capital gains on qualified participations are subject to taxation in Italy (with progressive rates from 23% up to 43% plus local surcharges up to 2,6%, in case of individuals, or to a 27.5% rate in case of other entities) limited to 50.28% of their amount; Capital gains on non qualified participations into Italian companies are not subject to taxation in Italy when realized by: (i) taxpayers resident into white list countries; (ii) entities or bodies established pursuant to international agreements executing in Italy; (iii) foreign institutional investors, even if not having tax personality (i.e., not subject to tax), established into white list countries; (iv) anybody, if realized on listed stocks. (*) rate applicable starting from 1 January 2012 IN THE FOREIGN COUNTRY … IN ITALY: Capital gains realized on units issued by a REIF are subject to a 20% substitute tax in Italy(*); exemptions are acknowledged from said taxation in Italy in the following cases: (i) taxpayers resident into white list countries; (ii) entities or bodies established pursuant to international agreements executing in Italy; (iii) foreign institutional investors, even if not having tax personality (i.e., not subject to tax), established into white list countries. (*) rate applicable starting from 1 January 2012 IN THE FOREIGN COUNTRY … Capital gains in the hands of the foreign investor

For any further queries, please contact: Dr. Gianluigi Strambi Raynaud and Partners Studio Legale Via Santa Maria Segreta, – Milan (Italy) Tel.: Fax: