Elective Residence Visa for Italy

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An Elective Residence Visa allows non-EU citizens to reside in Italy

You should submit your application for an Elective Residence Visa (ERV) to the Italian embassy or consulate in your home country. For example, U.S. citizens can apply to the Italian consulates in New York, Miami, San Francisco. Canadians should apply to the Italian consulates in Toronto or Montreal.

The main requirement for obtaining an ERV is that the applicants must be able to support themselves autonomously in Italy. This must through an income unrelated to employment. Your income must be sufficient to exclude recourse to the Italian welfare system.

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Applicants for an Italian ERV must be able to provide documented guarantees

According to Italian law, ERV applicants should meet two essential elements. Firstly, they must have somewhere to live in Italy. This can either be a property they own, or a secured tenancy with a contract.

Secondly, applicants must have an income stream. This should be approximately Euro 31,000 per annum. This income must continue in to the future – for the period of stay in Italy.

Verifying that an ERV applicant has somewhere to live is fairly straightforward. However, the assessment regarding adequate finances implies a so-called discretionary evaluation by the consulate.

By law, this assessment cannot be  arbitrary. In other words, the applicant must be able to see a logical explanation behind the decision-making process.

The law sets out various principles which the consulate should take into consideration when deciding whether or not to grant an ERV.

In particular, the available financial resources should be “ample”, “autonomous” and “stable”, thus the applicant should be able to sustain himself/herself without working in Italy.

The above means that financial resources should be fully accessible to the applicant. And, that funds should not be subject to unexpected, sudden fluctuations. The consulate must be able to make a reasonable assumption that an applicant’s financial resources will also exist into the future.

The applicant’s financial resources should originate from pensions, life annuities, ownership of real estate, ownership of stable economic-commercial activities or other sources of income. Income cannot however be from employment.

In the absence of any logical, valid and concrete reasons, so long as an applicant for an ERV meets the above requirements, the consulate cannot refuse to grant an ERV.

Finally …

Do you think your ERV application was wrongly rejected or do you need help with an ERV application?

The evaluation of the elements for an ERV application by the consulate is discretionary. However, as previously mentioned, it cannot be arbitrary.

Should you need further information concerning an elective residence visa or preparing your application or, if you wish to appeal the denial of an ERV, please contact us.

 

You may also like to read about what to do if your elective residence visa application is refused. We also have a series of info videos that you may like to watch.

Flat Tax Scheme in Italy

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The Italian Budget Law for 2019 introduced a flat tax regime

Set at 7%, the flat tax scheme in Italy aims to attract foreign and Italian nationals living abroad.

Individuals with an income from a foreign pension, or other source from abroad, can benefit from the scheme. In order to take advantage of the flat tax rate, individuals must transfer their tax residence to certain  municipalities. The municipalities have fewer than 20, 000 inhabitants. They are located in the Italian regions of Abruzzo, Basilicata, Calabria, Campania, Molise, Puglia, Sardinia and Sicily.

In addition, certain municipalities with fewer than 3,000 inhabitants are part of the scheme. These municipalities are in Italian regions impacted by the earthquakes in 2016.

Individuals who opt for the flat tax regime will be exempt from tax on the value of both financial assets (Imposta sul valore delle attività finanziarie detenute all’estero (Ivafe)) and real estate property (Imposta sul valore degli immobili situati all’estero (Ivie)) which they own abroad.

They will also be exempt from completing annual, “Quadro RW” filings. The Italian tax authority uses Quadro RW filings to monitor individuals resident in Italy with foreign investments and financial assets abroad.

Who can benefit from flat tax rate scheme?

Individuals from countries that have tax cooperation arrangements with Italy. Namely, Tax Information Exchange Agreements (TIES), Double Taxation Agreements (DTA) and Foreign Account Tax Compliance Agreements (FATCA).

Individuals who have not been an Italian tax resident for 5 years prior to the period for which their option is valid.

Do you have to apply to be part of the flat tax regime?

If you meet the criteria outlined above, you can adopt the new flat tax regime when you file your tax return related to the fiscal period in which you moved your tax residency to Italy.

You will need to indicate the jurisdiction/s in which you had your previous tax residence. The Italian tax authority will then forward this information, through the appropriate administrative cooperation instruments, to the tax authorities of the indicated jurisdiction/s.

It is possible to carve out income produced in one or more foreign countries or territories. You may, for example, decide that for income in a certain country or territory, the ordinary Italian tax rules should be applied. In principle, this allows you to benefit from foreign tax credits based on applicable tax treaty protections and relief on taxes you have paid abroad. You must specifically indicate this intention when you exercise your option to take up the flat tax regime.

How long is the option valid?

The flat tax regime is effective for nine years from exercising your option to adopt it. You may withdraw from the regime at any time. This will not prejudice the effect of previous fiscal years. However, withdrawal from the regime precludes you from exercising a new option to join the flat-rate tax regime.

The Italian tax authority may revoke your rights to the flat-rate regime by challenging your legal entitlement to it.

You must pay your 7% tax as a lump sum each year. The Italian tax authority sets the payment deadline for payments. Failure to pay in full ends your right to the flat tax regime.

Finally …

For more information, or to discuss what would best suit your personal situation, feel free to contact us.

Alternatively, seek advice from a qualified accountant registered with the ODCEC, the Italian professional accounting association of certified public accountants, auditors and advisors.

 

You may also be interested in The Principle of Tax Residence under Italian Law.

You may also like to watch our info videos.

Usucapione (Adverse Possession) in Italy

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What is Usucapione?

Usucapione is a legal method of acquiring ownership of an Italian property.

There are two essential elements to  usucapione. Firstly, material possession of the asset, acting as the owner (as opposed to someone who received the right of use from the owner, e.g., by  means of a contract). Secondly, the passage of a specific period of time.

In the context of usucapione, possession should be peaceful. That is to say, possession should not have occurred through violent or clandestine means. Possession should also be continuous and uninterrupted over time. This means that possession should not have been intermittent.

Time is the essential element in usucapione. Italian legislation provides for 20 years for properties where possession is in bad faith and for other rights concerning usufruct, right of use, easements, etc. 10 years if the property is in good faith, that is, with a registered title deed by a party who was not the real property owner;

Uninterrupted possession must occur during the above mentioned periods of time. How does the law define uninterrupted? It means that possession should not be vacant for more than one year. For example, if the owner takes back possession of his asset for more than one year, usucapione is considered interrupted.

According to case law, it is compulsory to provide clear evidence concerning the start of possession. Very often witnesses play a crucial role.

Not all assets are subject to usucapione. State-owned property and/or public assets, for example, cannot be adversely possessed.

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A case of usucapione?

For years a house had sat abandoned on the outskirts of a Sicilian village. Over a period of several years, starting in 1969, Giovanni started refurbishing the property. He moved in when he’d finished the renovation. Giovanni tamed the garden. He fenced it, established a vegetable plot and fruit orchard. Giovanni also fenced in some land abutting the property, where he keeps a few goats. Although he has no documents proving his title to the property, throughout the past fifty years, Giovanni has behaved as if owns the property.

Marie Louise is an American citizen who also has an Italian passport. She has presented a claim on the property. She asserts that she inherited the property from her grandfather and that she is therefore the rightful owner.

Is Marie Louise right about her claim? Or, has Giovanni acquired the property through usucapione?

How to organise a legal case based on usucapione:

The first step is to ensure you can evidence your right, specifically to have possessed the property, “uti dominus” (as if you were the owner of the property). Examples could be that you have rented the property, executed building work, etc.

Generally speaking, the role of witnesses is crucial. It is therefore essential to contact individuals who are prepared to give evidence in court.

Obviously, documented evidence is also important (for example, receipts regarding tax payments, invoices concerning building work, etc).

Compulsory mediation

Before starting a court case, it is imperative to apply for a compulsory mediation procedure with a mediation body (Organismo di mediazione) accredited by the Italian Ministry of Foreign Affairs. We recommend that you engage a lawyer to help. The application should indicate the parties involved in the procedure and the property subject to usucapione.

Where the mediation procedure results in a successful outcome, the agreement reached by the parties must authenticated in the presence of a notary public.

In case of a negative outcome from a mediation procedure, it is possible to then start legal proceedings in court.

Taking an usucapione case to court

Back to the above case regarding Marie Louise and Giovanni.

Marie Louise can sue Giovanni in court to reclaim possession and re-establish her full ownership of the property. The success of Marie Louise’s claim will depend on her ability to prove that she acquired the property by valid title and, that the property belonged to her predecessors by valid title prior to her inheriting it. In addition, if Marie Louise can prove that Giovanni’s holding has not been at the property in an uninterrupted manner or that she took proprietary action during Giovanni’s holding and therefore his acquisitive prescription is incomplete, Marie Louise may be able to reclaim possession of the property.

To challenge Marie Louise’s claim, Giovanni should use witnesses to testify that he renovated the house, fenced in the land and has worked the garden in a public, continuous and uninterrupted manner for the past fifty years. In effect he has treated the property as if he were the owner. If during the past fifty years, he has also had access to utilities (e.g., water, electricity) and has paid property taxes, Giovanni should be able to produce receipts to support his usucapione claim.

Finally …

If you own property in Italy, which you have neglected for some time, it is advisable to consult a specialist Italian property attorney to prevent any risks connected with usucapione. If you would like to discuss a case, please contact us for a free consultation.

You may also be interested in Usucapione – Safeguard Your Ownership Rights

Italian Elective Residence Visa (ERV) Refused – Case Studies

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Applying for an Italian elective residence visa

There are two main requirements when applying for an Italian elective residence visa (ERV). Firstly, the availability of a dwelling, which an applicant has elected as their residence in Italy. This can either be an applicant’s own Italian property or a rental property with a tenancy agreement.

Secondly, by law, an applicant must have a financial flow corresponding to approximately Euro 31,000 per annum. The law further requires that finances be ample and autonomous financial resources. These finances should continue into the future – for the duration of the applicant’s residence in Italy.

An Italian consulate in the applicant’s home country is responsible for evaluating the above criteria. While the consulate’s decision is discretionary, the evaluation cannot be arbitrary.

In other words, a consulate cannot refuse to grant an ERV in the absence of valid reasons to do so. Furthermore, an applicant must be able to understand the logic behind the decision-making process of the relevant authority.

An applicant can challenge a consulate’s refusal to grant an ERV in court.

Case studies: appeals to overturn refusals of an Italian elective residence visa

Every year, a number of ERV applicants receive ERV refusals. Here, we examine two such cases and discuss Judgment no. 1396 of 5th December 2018.

The ERV applicants in both of these cases lodged appeals for the refusal of an ERV against the Italian Consulate General in New York. The cases took place at the Administrative Court of Lazio.

Case 1: applicants successfully challenge consulate’s refusal of an Italian elective residence visa

In the first case, no. 6421, the applicants had applied for an ERV with the intention of permanently establishing their residence in Turin.

The consulate refused the application on the grounds that the applicants did not meet the income requirement set by Italian law for an ERV.

In this case, the applicants had an annual rental income corresponding to USD80,000.00 deriving from a property in Brooklyn. They also had additional annual income corresponding to USD60,000.00. The applicants received this income on a monthly basis from an insurance company. Their financial resources clearly exceeded the amount set by Italian law.

When they refused to grant an ERV, the consulate generically referred to the value of assets being subject to market fluctuations. They neither specifically analysed the sources of income nor did they explain their reasoning for refusing an ERV. The consulate simply said that the declared incomes appeared to be steady and continuous over time but they considered them insufficient to counterbalance the possible fluctuations of their value.

For this reason and in light of the documentation provided by the applicants, the Administrative Court ordered the consulate to review its decision.

Case 2: The court confirmed the consulate’s decision to deny an ERV

In the second case, no. 1396, the consulate also refused an ERV. In her application to the Italian consulate in New York, the applicant had declared starting a professional activity as a consultant in 1999. She maintained that she therefore had sufficient savings to fund her lifestyle without needing to work.

After having her application for an ERV rejected three times, the applicant decided to challenge the decision. She based her case on a lack of due diligence and arbitrary decision-making.

The Italian consulate in New York made the following statement regarding their ERV refusal:

“The information you provided on the automatic withdrawal from your investment account shows that the amount paid into your checking account, generates a yearly income of USD 36,000 (approx. Euro 32,000). This barely meets the minimum required amount of Euro 31,000 per annum, as set forth by Italian law, for the issuance of an ERV, especially considering that these funds are subject to fluctuations in Euro/USD exchange rates.

Also, your financial assets – although substantial – are mostly invested in stock funds and investments that, by definition, fluctuate significantly with the financial markets and demonstrate a high level of volatility. Therefore, your funds do not correspond to the documented and detailed guarantee of substantial and stable private income, which must be of a regular nature and reasonably certain in the future, as the law requires”.

Three main elements formed the basis of the consulate’s refusal of an ERV in this case.

In the first instance, there was an absence of adequate and documented guarantees. That is to say, there was no evidence concerning availability of large, autonomous, stable and regular financial resources. In addition, there was no reason to assume that the applicant’s financial resources would exist into the future.

Secondly, the applicant’s declared income, corresponding to USD36,000 (approximately Euro32,000) barely met the legal annual requirement in Italy (Euro31,000).

Thirdly, as the applicant’s financial resources were mostly invested in stocks, they were subject to foreign exchange rate fluctuations.

The Administrative Court in Lazio refused the applicant’s appeal. The court judged that the consulate’s refusal to issue an ERV did not appear to be unreasonable.

According to Italian case law, a bank account, unless extremely significant, does not constitute evidence of ample financial resources with future continuity

The court in this case, therefore, upheld the consulate’s refusal of an ERV. The applicant’s assets, although significant, did not generate sufficient income to warrant the issuance of an ERV. The court also concurred with the consulate regarding the volatility of stock markets and foreign exchange risks.

Finally …

An applicant for an Italian elective residence visa can always contest a consulate’s refusal of an Italian elective residence visa. If you believe a consulate has misinterpreted or misunderstood your application, we would recommend that you seek legal support in contesting the consulate’s decision.

The Italian Elective Residency Visa (ERV) – Case StudyShould you need further information concerning an elective residency visa, please feel free to contact De Tullio Law Firm at the following email address info@detulliolawfirm.com.

You may also be interested in Elective residence Visa Italy: general information

Making An Italian Will. Information And Template

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A will determines distribution of your assets

By making an Italian will, you can decide how to divide your estate after your death. In addition, it allows you to be certain that your heirs don’t pay more Inheritance Tax than necessary.

What is an Italian Will?

A will is a legal document. The will writer, known as the testator, establishes in written form, how to distribute their estate after death (article 587 of Italian Civil Code).

Anyone over the age of 18, who is not legally incapacitated, can write an Italian will. Incapacity is defined by Italian Civil Code.

Italian law states that a will is revocable at any time. Testators’ rights to dispose of their assets is protected until their last breath.

The content of an Italian will is essentially patrimonial. That is to say, it deals with the distribution of a testator’s inheritable assets. However, the law states that testators can also make dispositions of a non-pecuniary nature in a will. For example, the recognition of a natural child.

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Why is having an Italian will important?

In order to understand how Italian inheritance law works, you may like to read our comprehensive guide on this subject.

If you own assets such as property in Italy, you should not underestimate the  importance of a will in Italian.

The laws governing forced heirship are very strict in Italy. Because of this, anyone wishing to derogate from these rules should seek legal advice in order to ensure their plans comply with Italian and European succession rules.

Not only does a will enable a testator to assign assets to beneficiaries, it can also be useful in preventing conflict among heirs. In certain cases, it can also permit a reduction in inheritance tax payments.

Because it makes life easier for those you leave behind, if you own property in Italy, we would advise that you make an Italian will.

How do you make an Italian will?

An Italian will must be in Italian. For an Italian will to be legally valid,  a testator must hand write, sign and date the document.

For straightforward cases, testators can use a very simple will format with wording such as this:

Io sottoscritto/a, …………………. (indicare cognome, nome, luogo e data di nascita, residenza) revoca tutte le mie precedenti disposizioni testamentarie. Dispongo del mio patrimonio al momento della mia morte come segue.

Nomino erede universale di tutti i miei beni terreni …………. (indicare cognome, nome ed eventuali rapporti di parentela. Se non si tratta di un parente, indicare anche luogo e data di nascita).

Cedo a ………… (indicare cognome, nome ed eventuale parentela, se non è un parente è opportuno indicare luogo e data di nascita) i seguenti beni: …………………….. (specificare chiaramente i beni).

Data

Firma

I, the undersigned, …………………. (indicate surname, name, place and date of birth, residence) herewith revoke all my previous testamentary dispositions. I dispose of my patrimony at the time of my death as follows.

I appoint as universal heir of all my worldly goods …………. (indicate surname, name and any relationship of kinship. If it is not a relative, you should also indicate place and date of birth).

I give to ………… (indicate surname, name and any relationship, if it is not a relative, it is appropriate to indicate place and date of birth) the following assets: …………………….. (clearly specify the assets).

Date

Signature

Finally …

Even if you think your situation is straightforward, it may not be. If you own property in Italy and elsewhere, this adds a layer of complexity. It will require cross border legal expertise. We therefore recommend that you seek independent legal advice regarding your personal circumstances.

At De Tullio Law Firm, we have over 55 years of experience managing cross border and Italian inheritance matters throughout Italy. We are a member of STEP, the world’s leading professional association for trust and estate practitioners.

If you would like to discuss your estate plan with us or if you are considering making an Italian will, please get in touch at: info@detulliolawfirm.com

 

You may also be interested in Do beneficiaries have to pay taxes on inheritance?