Italian law differentiates between property leases (locazione) and business branch leases (affitto di azienda). Property leases are used for residential or commercial premises and they are governed by the general provisions of the Italian Civil Code and the by the special legislation on tenancy.
In relation to non-residential leases, certain distinctions apply to hotels and other premises used for activities involving contact with the public. Mandatory provisions apply regulating the landlord/tenant relationship in favour of the tenant. These include provisions relating to the term of the lease, rent increases, the tenant’s right to carry out activities involving contact with the public etc. Any deviation from these in the lease contract which is less favourable to the tenant is considered invalid, even if explicitly accepted by the tenant. An invalid clause, however, does not render the entire contract invalid.
Non-residential lease agreements (ie for offices, retail space, hotels etc.) providing for a yearly rent greater than EUR250,000.00 (grandi locazioni), provided that such leases do not affect buildings with a historical value confirmed by a local administrative order, may not be subject to the mandatory provisions of the Law no. 392 of 27 July 1978 (Tenancy Law). In other words, for such leases, the parties are free to agree terms which depart from the mandatory provisions of the Tenancy Law, which are generally to the benefit of the tenant. This new option applies to any lease agreements entered into after 11 November 2014 by means of Italian Law Decree no. 164/2014 (the “Decreto Sblocca Italia”). Certain rules applicable to lease agreements and established by the Italian Civil Code, however, still apply (eg the rules relating to the allocation of responsibility for maintenance between the landlord and the tenant).
If the leased assets are a ‘going concern’ or ‘business branch’ (azienda or ramo d’azienda), as defined under Italian law, the above-mentioned mandatory provisions of the Italian Tenancy Law do not apply and the parties are free to contract as they wish. However, in order to avoid any risk of requalification of the business branch lease to a property lease agreement for commercial use (with the application of the relevant mandatory provisions), the right to use the premises for the exercise of the tenant's activity shall represent only one of the various elements constituting the business branch. The same applies to services agreements, that can be used in lieu of a property lease agreement where the owner/supplier offers – besides the right to use certain real estate premises – some specific additional services against the payment of a consideration.
Italian law also recognises a bailment contract for granting free use of premises (comodato). Under this type of contract, the use of an asset can be granted free of charge for a specific purpose over a set period of time. Contracts like this are often used when a tenant needs to carry out fit-out and decorating work on the premises before the start of the lease.
The relevant energy performance certificate (APE) must be either attached to or mentioned in any new lease agreement (whether affecting a property or a branch of a business) or sub-lease (but not to a renewal), depending on the relevant Region where the property is located. Where the certificate is missing, sanctions may apply to both the tenant and the landlord.
Last modified 13 Mar 2025
The Tenancy Law provides for a minimum term of six years for commercial leases (except where the activity to be carried out in the premises is temporary) and nine years for hotel leases. Parties are free to agree upon longer lease terms, while, if the lease term agreed upon by the parties is less than the statutory minimum term, the relevant contractual provision is deemed void and it is automatically replaced by the statutory provision.
When the initial period of the lease expires, the contract is automatically renewed at the same terms and conditions for another six-year term (or nine years for hotel leases), unless either party gives to the other written notice not to renew the lease at least 12 months (or 18 months in the case of hotels) before the end of the initial term.
When the initial period of the lease expires, the tenant is free to decide not to renew the lease while the landlord can only deny the lease tacit renewal in very limited circumstances, as set forth under the Tenancy Law (including in case the landlord has the intention to use the premises itself, to demolish and rebuild, or to refurbish the building in order to comply with certain regulations). Tenants can therefore usually rely on the renewal of the lease after the initial term. At the end of the subsequent lease terms, there are no restrictions to the landlord's right to deny the lease automatic renewal by giving to the tenant the prior notice mentioned above.
Pursuant to the Italian Civil Code, the lease term cannot be longer than 30 years. Leases with a duration of more than 30 years or in perpetuity are not deemed void but shall be reduced to the statutory limit of 30 years. Such reduction may be invoked either by the landlord or the tenant.
In relation to business branch leases, the parties are free to negotiate the term of the lease. In general business branch leases do not provide for an automatic renewal at the end of the term stated in the contract.
Last modified 13 Mar 2025
The minimum term for leases of industrial, office and retail property is six years and for a hotel nine years. If premises are used for activities involving contact with the general public, tenants are entitled to be indemnified for any loss of goodwill on termination of the lease. This indemnity is equal to 18 times the last monthly instalments of the rent paid (21 times in the case of a hotel). If the premises are leased within a year to a tenant carrying out the same or similar activities as the former tenant, a further indemnity of the same amount is payable to the former tenant. The payment of this indemnity to the tenant is a condition precedent for the surrender of the premises to the landlord. The indemnity is not due if:
If the premises are used for activities involving contact with the general public, the tenant has a pre-emption right in case of sale of the leased property (ie landlord must offer to the tenant the opportunity to purchase the premises on the same terms and conditions as any other potential buyer) and in case of new lease of the leased property once the former lease is expired.
The tenant is allowed to sublease the leased property (unless the lease contract contains an express prohibition to sublease) while the assignment of the lease is subject to the landlord’s prior consent. However, in case the lease is assigned or the property is subleased to a third party as part of an ongoing business carried on by the tenant at the premises, the tenant may sublease the property or assign the lease without the landlord’s consent.
All of these provisions protecting the tenant are mandatory.
Retail leases, in particular the leases for property within shopping centres, may have turnover rents where all or part of the rent is determined by the store’s profits or turnover.
Retail tenants may also be subject to obligations which exist for the benefit of the shopping centre as a whole, for example an obligation to open and trade during specified hours and to contribute towards marketing the centre.
Although the landlord will maintain the structure and exterior of the premises, a retail tenant may be given the right to maintain its own shop front in its usual trading style.
Last modified 13 Mar 2025
No, but the Italian Tenancy Law provides that, upon expiry, the lease is tacitly and automatically renewed unless either party denies the renewal by giving to the other party written notice thereof at least 12 months (or 18 months in the case of hotels) before the relevant expiry date. Upon the first expiry date, the landlord can deny the tacit renewal only in specific circumstances, as set forth under the Italian Tenancy Law.
In any case, should the tenant continue to occupy the real estate after the expiry of the commercial lease, than it shall be obliged to pay to the landlord an occupation indemnity (and/or other penalties provided for in the lease agreement) till the hand back of the premises.
Last modified 13 Mar 2025
If the tenant does not return the premises once the lease contract expires, the landlord would need to start an eviction proceeding before the relevant court in order to obtain a judicial eviction order and the subsequent property release. This can take several months.
Last modified 13 Mar 2025
The landlord can claim the lease termination in case of tenant’s material breach of the lease provisions. Property leases usually contain a termination clause identifying the lease provisions whose breach would trigger the landlord’s right to terminate the lease contract upon simple notice. Such clause usually provides for a “cure period” during which the tenant can rectify the breach of contract in order to avoid the lease termination.
Absent a termination clause, in case of tenant’s material breach of the lease provisions, the landlord would need to file a claim before the relevant court to obtain the lease termination; such proceedings can be lengthy (depending on a number of factors).
Pursuant to the Italian Civil Code, in case of tenant’s material breach of the lease provisions, the landlord can also serve to the tenant a notice to perform/rectify the breach within not less than 15 days (or any different timeframe provided for under the lease agreement) specifying that in case the tenant does not rectify the breach within such timeframe, the lease will be automatically terminated. In such a case, if the tenant does not rectify the breach within the above timeframe, the lease is considered as automatically terminated. In case the tenant objects such termination, the landlord would need to file a claim before the relevant court in order to obtain a decision confirming (or not) the termination.
If the tenant does not return the premises upon the termination of the lease, the landlord would need to start an eviction proceeding before the relevant court in order to obtain a judicial eviction order and the subsequent property release. This can take several months.
Last modified 13 Mar 2025
Local authorities have certain rights to acquire property on a compulsory basis and this includes property held under leases. These powers can only be exercised on certain grounds, such as to enable new developments. The tenant receives the market value of its interest in the property and may also be entitled to further compensation.
Last modified 13 Mar 2025
According to law, as a security of the lease obligations, the tenant can be requested to deliver:
Last modified 13 Mar 2025
Leases usually specify the permitted use of the leased premises and contains a specific prohibition for the tenant to modify this use. Further restrictions can be provided for under the applicable town planning laws or under the applicable local zoning tools or by orders of the relevant authority.
Last modified 13 Mar 2025
Most leases limit the tenant’s right to alter or improve the premises. Structural alterations are usually prohibited, particularly where the tenant only leases part of the building. Non-structural alterations usually require the landlord’s consent. The parties can agree in the lease contract that the landlord cannot unreasonably delay or withhold such consent.
Pursuant to the Italian Civil Code, at certain conditions, the tenant has the right to be paid an indemnity for the additions and improvements made during the lease; in the lease market practice, a provision excluding such right is usually included into the lease contracts.
Usually, in the lease contracts, the landlord reserves the right to require the tenant, at the end of the lease, to remove, in whole or in part, any alterations, additions and improvements made during the lease, at its own cost.
Last modified 13 Mar 2025
Pursuant to the Italian Civil Code, the tenant can assign the lease contract to a third party subject to the landlord’s prior consent. The lease contracts can provide that the landlord’s consent cannot be unreasonably withheld and/or identify specific cases in which the landlord’s consent can be considered as already granted (for example, in case of assignment to group companies).
In case the landlord grants its consent to the assignment, the tenant is released from its obligations under lease contract unless the landlord declared not to release the tenant from such obligations; in the latter case, the tenant remains jointly liable with the assignee in relation to the lease obligations.
As a partial departure from the above provisions, in case the lease is assigned (or the premises are subleased) to a third party as part of a business branch (ie in the context of a business transfer) the landlord’s prior consent is not required, but the landlord is entitled to object for "serious reasons" within 30 days from the receipt of the relevant communication.
The landlord is free to transfer the title of ownership to the leased premises. In such a case, the lease contract remains fully valid and effective between the purchaser, as new landlord, and the tenant.
The landlord can assign the lease receivables to third parties, unless this is prohibited under the lease contract.
Last modified 13 Mar 2025
Pursuant to the Italian Tenancy law, the parties can provide that the rent is adjusted annually by a maximum of 75% of the variation in the ISTAT index (a measure of consumer price inflation) in the case of non-residential leases (however 100% of the variation in the ISTAT index may be applied (if agreed by the parties) to non-residential leases which have a term that exceeds the minimum term provided for by law, ie six years for commercial leases and nine years for hotel leases) and by a maximum of 100% of the variation in the ISTAT index in the case of residential leases. The above limitation to the rent indexation can be departed from by the parties in relation to non-residential lease agreements (ie for offices, retail space and hotels) providing for a yearly rent greater than EUR250,000.00 provided that such leases do not affect buildings with a historical value confirmed by a local administrative order.
In a business branch lease (ie a lease with a contractually agreed term entered into for the purposes of a stand-alone business such as the operation of a retail unit within a shopping centre) the parties are free to agree the percentage of the ISTAT index variation to be applied, usually 100%.
Usually, in the case of an initial reduced rent, the ISTAT adjustment starts from the year in which full ordinary rent first becomes payable.
‘Turnover rents’ and ‘stepped rents’ (where rent changes over time to reflect increasing benefits for the tenant or the investment made by the tenant in the premises) are also permitted.
It is currently advisable to specify in the lease contract the express reasons for any rent increase, to make it clear that increases are not sought in order to compensate for losses due to inflation, since this is done through application of the ISTAT index variation to the contractually agreed rent.
Last modified 13 Mar 2025
In the case of a non-residential lease, rent is adjusted annually by a maximum of 75% of the variation in the ISTAT index (a measure of consumer price inflation) (however 100% of the variation in the ISTAT index may be applied (if agreed by the parties) to non-residential leases which have a term that exceeds the minimum term provided for by law, ie six years for commercial leases and nine years for hotel leases), while in the case of residential property the annual adjustment can be a maximum of 100% of the ISTAT index variation. In the case of a business branch lease, a maximum adjustment is not provided for by law but the lease itself will usually provide for an adjustment equal to 100% of the ISTAT index variation. The above limitation to the rent indexation can be departed from by the parties in relation to non-residential lease agreements (ie for offices, retail space and hotels) providing for a yearly rent greater than EUR250,000.00 provided that such leases do not affect buildings with a historical value confirmed by a local administrative order.
Last modified 13 Mar 2025
Non-residential leases are exempt from VAT, unless the landlord opts for the VAT regime to apply and states this explicitly in the contract. The applicable rate of VAT is 22%.
Last modified 13 Mar 2025
There are several options available to the landlord depending upon the specific circumstances and what the landlord wants to achieve.
Interest on arrears: without prejudice to the landlord's right to terminate the lease contract, any delay in the payment of the rent and/or service charges due can result in the application of interest on arrears. Interest rates are usually determined on the basis of two legal parameters: (i) legal interests, and (ii) interests for late payment in commercial transactions. It is customary that the parties agree on a given rate plus certain additional basis points.
"Solve et repete" clause (or self-help right): it is market practice for the parties of a commercial lease to convene that the payment of the rent and/or the service charges may not under any circumstances be suspended, deferred or compensated by the tenant, even if the latter has rights or claims against the landlord, which shall be pursued by means of a separate proceedings and only after the duly fulfilment of the tenant's payment obligation vis-à-vis the Landlord.
Securities: the landlord usually is provided with (i) an interest-bearing cash deposit, (ii) a “first demand” bank guarantee, or (iii) a parent company guarantee, on which it can rely in case of breach by the tenant of its payment obligations under the lease agreement.
Termination clause: Property leases usually contain a termination clause identifying the lease provisions whose breach will result in the landlord’s right to terminate the lease contract upon simple notice, without prejudice to further damages. Such clause usually provides for a “cure period” during which the tenant can rectify the breach of contract in order to avoid the lease termination.
Injunction to pay the rent: in case of the tenant's failure to pay the rent and/or service charges due under the lease agreement, the landlord can request the competent judicial authority to issue an injunction to pay the relevant amounts due (and pay the relevant interests in case of late payment) and, in case of termination for default, to issue an eviction summons for the release of the property.
Last modified 13 Mar 2025
The Italian tenancy law provides a list of the services which can be charged to the tenant. The general principle is that tenants can be charged with the full cost of anything done for their benefit, while anything done partly or solely for the benefit of the landlord must be partly or entirely paid for by the landlord. It is advisable to define in the contract what kind of expenses are to be charged to the tenant.
Registration tax (imposta di registro) is payable no later than 30 days after the signing of the lease contract (or the date of effectiveness of the agreement, if earlier). This tax is charged at 1% of the total anticipated rent for the duration of the lease, or 1% of the annual rent if it is to be paid on an annual basis. The law provides for payment of registration tax to be split equally between the parties, while any other expenses, stamp duties or taxes related to the lease are normally paid by the tenant.
In the case of a business branch lease, this does not apply, so registration tax is usually paid by the tenant.
If the landlord and the tenant enter into an agreement amending an existing lease which only reduces the current rent, the registration of the amendment agreement will not be subject to the payment of any registration tax or stamp duty.
Last modified 13 Mar 2025
Generally, the landlord is obliged to ensure that the premises remain fit for their normal and agreed use. In a building with multiple tenants, the landlord is responsible for repairing and maintaining the common areas and the structure. Each tenant is responsible for the maintenance of the interior of its individual unit, excluding structural and external repairs.
Expenses for any common services provided by the landlord are paid by tenants in proportion to the size of their units relative to the total rentable area of the property.
Last modified 13 Mar 2025
The Italian Civil Code distinguishes between ordinary and extraordinary maintenance. Generally, the tenant is responsible for minor repairs and ordinary maintenance while the landlord is responsible for extraordinary maintenance. However, the parties may depart from this allocation of responsibility, except for the extraordinary maintenance of the structural parts of the building which shall remain with the landlord.
Last modified 13 Mar 2025
These costs are usually paid by tenants on the basis of their specific usage and requirements.
Last modified 13 Mar 2025
Many leases contain a clause requiring the tenant to take out an insurance policy covering any damage caused to third parties or to the property as a result of their activities on the premises and the so-called “tenant liability policy” (rischio locativo) covering damages deriving from, inter alia, fire, water leakages, lighting and other events.
Usually, the insurance policy for the building itself is taken out by the landlord.
Last modified 13 Mar 2025
What is the usual length of each type of commercial lease?
The Tenancy Law provides for a minimum term of six years for commercial leases (except where the activity to be carried out in the premises is temporary) and nine years for hotel leases. Parties are free to agree upon longer lease terms, while, if the lease term agreed upon by the parties is less than the statutory minimum term, the relevant contractual provision is deemed void and it is automatically replaced by the statutory provision.
When the initial period of the lease expires, the contract is automatically renewed at the same terms and conditions for another six-year term (or nine years for hotel leases), unless either party gives to the other written notice not to renew the lease at least 12 months (or 18 months in the case of hotels) before the end of the initial term.
When the initial period of the lease expires, the tenant is free to decide not to renew the lease while the landlord can only deny the lease tacit renewal in very limited circumstances, as set forth under the Tenancy Law (including in case the landlord has the intention to use the premises itself, to demolish and rebuild, or to refurbish the building in order to comply with certain regulations). Tenants can therefore usually rely on the renewal of the lease after the initial term. At the end of the subsequent lease terms, there are no restrictions to the landlord's right to deny the lease automatic renewal by giving to the tenant the prior notice mentioned above.
Pursuant to the Italian Civil Code, the lease term cannot be longer than 30 years. Leases with a duration of more than 30 years or in perpetuity are not deemed void but shall be reduced to the statutory limit of 30 years. Such reduction may be invoked either by the landlord or the tenant.
In relation to business branch leases, the parties are free to negotiate the term of the lease. In general business branch leases do not provide for an automatic renewal at the end of the term stated in the contract.
Last modified 13 Mar 2025