International Succession

Foreign nationals with a second home in Italy are subject to international succession procedures

International succession pertains to the estate of a person who dies in a country other than that of their nationality or residence.

It is likewise applicable to someone who leaves movable or immovable assets in a country other than that of their citizenship or residence. If, for example, you are a foreign national who owns a second home in Italy, your estate will be subject to international succession procedures.

In August 2015 new EU regulations governing inheritance came into force. These regulations, known as Brussels IV, aim to simplify and accelerate international inheritance matters and make cross-border succession procedures more efficient. Prior to the introduction of Brussels IV, international succession laws differed from country to country.

Since its introduction, there have now been a number of cases regarding the interpretation of the new EU regulations. One such international succession case came to court in Salerno in 2018.

The case involves two brothers who co-owned three properties in Italy. In 2016 one of the brothers, an Italian citizen, died in New York where he was a resident. He died intestate meaning he didn’t leave a Will.

One of the decedent’s six brothers is a co-owner of the three Italian properties. He took legal action to wind up the Italian property co-ownership. He subsequently filed an inheritance claim for his brother’s share in the property.

Article 24 paragraph 1 of EU Regulation 1215/2012 (so-called “Brussels I bis”) governs dissolutions of co-ownerships. It entrusts such cases to the court of the country in which the property is located. In this case therefore, Italy.

To make life simpler for those you leave behind, it is crucial to have a Will.

For estate divisions, the court in Salerno applied the Brussels IV regulation.

Article 4 of the regulation establishes that the jurisdiction which rules on the succession as a whole, is that of the country where the deceased was habitually resident at the time of death. However, Article 10 provides for subsidiary jurisdiction of courts in which the estate is located – if the deceased was a national of that country at the time of death.

Returning to the case in question. The court of Salerno considered that the deceased was habitually resident in the State of New York. It therefore ruled that the case should be governed by the law of New York State.

Adding to the complexity of this case, rules of private international law are also relevant. The rules governing New York private international law provide that the law of the place where the property is located applies to successions concerning immovable assets.

The judge has adjourned the case until parties produce U.S. regulatory sources. This is something of a landmark case. It sets a precedent inasmuch that judges have the power and duty to ascertain foreign regulatory sources of their own volition.

Although Regulation 650/12 aspires to harmonise international succession, in terms of effectiveness it is confusing and open to interpretation.

For international succession and division of estates, Italian inheritance law specifically provides for rights to so-called, “forced heirs”. Their inheritance quota is guaranteed.

However, in countries with common law systems, such as the UK and the USA, testators can rule on how estates should be divided.

Brussels IV allows testators to make a choice of law in their Will

International Succession Planning

Article 22 of Brussels IV allows individuals resident overseas to elect which country law should govern their inheritance.

Where individuals have multiple nationalities, they may elect to have any one of their nationalities apply to their Italian assets.

In effect, this means that you can avoid any jurisdictional confusion after your death. However, you need to take action by making, “Choice of Law Codicil” in your Will.

Finally …

If you are in the process of drafting, or reviewing, your Will, you should consider aspects such as foreign matrimonial regimes, usufruct, tax consequences, joint ownership structures and other foreign proprietary rights before deciding which law to apply to the devolution of your estate.

Should you need further information concerning the topic, our legal professionals will be happy to discuss your situation. Please contact De Tullio Law Firm at the following email address: info@detulliolawfirm.com

 

You may also be interested in Applying A Power of Attorney in Italy

Benefit of Inventory. Accepting An Italian Inheritance

How to protect your personal assets from debts associated with an Italian inheritance

At De Tullio Law Firm, we understand that when a loved one dies there are many issues that need attention at an extremely difficult time. Having to make funeral arrangements, notifying friends and family and the grieving process.

On top of this, there are also critical legal matters that require consideration.

If your loved one left assets not only at home but also in Italy, estate administration is more complex. As cross border legal specialists in Italy, this is an area in which our legal team can help. Should you wish to discuss your situation with us, please get in touch.

Italian estate inheritance options available to heirs

Inheritance consists of assets (moveable and immovable property) and liabilities (debts).

Italian law stipulates that an heir becomes responsible for settling any debts the decedent may have left.

The acceptance of an inheritance sometimes presents a risk. If the value of assets included in the inheritance is less than liabilities, heirs are responsible for settling debts from their personal finances.

In Italy, inheritance always requires acceptance or refusal. Italian law provides three inheritance options in this regard.

Unconditional acceptance of the inheritance

An heir inherits all the assets subject to succession. The beneficiary assumes personal liability for the decedent’s liabilities, even if debts exceed the value of the assets. An heir therefore becomes liable in a personal capacity (with their own finances) for any portion of the decedent’s debts that the inheritance does not cover.

Refusal of the inheritance

This means an heir completely renounces the succession. In effect, an heir renounces all rights to the inheritance. The statutory arrangement is that the share of inheritance is then subject to a ‘right of representation’. Thus it passes to an heir’s children, and if there are no children, to any other heirs.

Acceptance under the benefit of inventory (accettazione con beneficio di inventario)

This is usually the best option if you are uncertain whether the inheritance comprises debts and other succession charges.

What is the acceptance of inheritance under benefit of inventory?

According to Article 490 of the Italian Civil Code, acceptance under the benefit of inventory is an act by which a person declares the acceptance of inheritance but wants to protect personal assets from becoming entwined with those of the deceased.

Usually, the assets of the heir and that of the deceased are merged into one, so not only does the heir inherit movable and immovable assets, but also any debts and liabilities.

Whoever accepts an inheritance must settle debts, so caution is advised. In order to protect an heir’s personal assets, the acceptance of the succession is subject to a condition, the benefit of inventory. This permits the heir to assess what the inheritance actually comprises before deciding whether or not to accept it.

There is no obligation for an heir to accept the inheritance. Drawing up an inventory of debts and assets allows the heir to make an informed decision about the inheritance: either to accept and pay debts from the assets inherited, or to refuse the inheritance because debts outweigh inherited assets.

Effects of acceptance under benefit of inventory

The first advantage is that the estate of the deceased remains distinct from the estate of the heir. In essence, this means that an heir does not have pay the decedent’s debts for a value greater than that of the inherited assets. In addition, creditors cannot recoup any debts from the heir’s personal assets.

How to accept the inheritance under the benefit of inventory

To accept an inheritance using the benefit of inventory, there are some fundamental requirements. Article 490 of the Italian Civil Code covers the procedure.

Firstly an heir has to file a declaration written in Italian, with a notary or a clerk of court in the locality where the succession procedure is taking place. Secondly, a detailed inventory of all the assets belonging to the inheritance is necessary.

Within a month of filing the above mentioned declaration, the notary or clerk must transcribe it in the relevant land registries. This transcription then permits the heir to pay the creditors and the bequests.

Finally …

If you are in the difficult situation of considering whether to refuse or accept an Italian inheritance, using the option of benefit of inventory may be the way forward for you.

You may also be interested in Inheritance Law and Taxes

Italian Luxury Property: Legal And Fiscal Definitions

What is a luxury property in Italy?

From a legal and fiscal perspective, the Italian luxury property category of real estate includes castles as well as certain types of property such as historic villas, mansions and palaces.

Before you sign any paperwork relating to a property, you should check its legal and fiscal category.

If you need advice on any aspect of managing property searches and checks in Italy, we can help.

Legislation relating to Italian luxury property

Italian law specifies purchase tax and annual municipal tax rates on luxury properties in Italy.

Contrary to what many think, luxury homes are not exclusively large properties – in terms of square meterage. Real estate location, cultural value and the quality of finishes also determine the classification of a property.

Buying a luxury property means that as a purchaser, you will not be able to take advantage of certain benefits relating to property registration tax.

Furthermore, once you own the property, you will not qualify for municipal tax deductions and exemptions.

Italian law uses two sets of guidelines to determine luxury property: Ministerial Decree 2/8/69 and cadastral criteria.

Luxury properties: Ministerial Decree 1969

According to this law, the definition of luxury real estate means a property must meet precise criteria. It must have at least one of the characteristics set out in the Ministerial Decree 2/8/69. These include: properties in areas which, according to town planning and zoning laws, are for villas or private parks.

Single-family homes, which sit on building plots of not less than 3,000 square meters. This category excludes agricultural areas, even if planning provides for the possibility of building residential properties.

Single-family homes with certain types of sports facilities. In particular, the law refers to swimming pools with a minimum area of 80 square meters and to tennis courts on drained ground extending to at least 650 square meters.

Single dwellings with a surface area of more than 200 square meters, excluding balconies, terraces, cellars, attics, stairs and parking spaces, that have an open area of land more than six times the covered area.

Individual real estate units with a surface area of more than 240 square meters excluding balconies, terraces, cellars, attics, stairs and parking spaces.

Properties on land where the value of the land exceeds the value of the property by at least one and a half times.

Even if a property does not have any of the above characteristics, there is a table attached to Ministerial Decree 2/8/69. This table states that a property can belong in the luxury property category if it has at least four characteristics among a list of finishes.

Specifications are complex and for the avoidance of doubt, we would advise you to seek independent legal advice.

The Ministerial Decree of 1969 is quite exhaustive in defining the characteristics of luxury homes. However, Italian legislation governing cadastral classifications also contains important indications.

Luxury properties: cadastral classification criteria

Article 33 of Legislative Decree 175/2014, assesses the cadastral classification of Italian properties. Its use is almost exclusively limited to assessing property tax rates. In particular for principal residences (prima casa).

For cadastral purposes, luxury properties are those belonging to the following categories:

A/1: stately homes – classical buildings with above-average finishes in areas considered valuable due to the presence of parks and/or gardens.

A/8: dwellings in villas. These are residential properties with fine finishes set in a park or a garden.

A/9: castles, palaces and mansions of outstanding cultural and historical and value. These mainly consist of single real estate units.

Italian properties belonging in these categories are luxury properties. Owners cannot therefore benefit from tax benefits and/or tax exemptions.

Finally …

Italian Luxury Property: a Legal and Fiscal DefinitionFor over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice. We offer services in all the major fields of Italian law with particular expertise in real estate, inheritance and family law matters. Get in touch: info@detulliolawfirm.com

 

You may also be interested in Italian Property: Cadastral and Zoning Compliance

Usucapione (Adverse Possession)

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.

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. You can read more about usucapione or, 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

Making An Italian Will. Information And Template

A Will determines distribution of your assets

Making an Italian Will

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.

Why is making an Italian Will important?

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

You should not underestimate the  importance of making an Italian Will.

The laws governing forced heirship are very strict in Italy. Because of this, anyone wishing to derogate from the 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?

When making an Italian Will, it 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 format with wording such as this:

I, the undersigned, …………………. (indicate surname, name, place and date of birth, residence) 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?

Legitimate Heirs. Rights of “Forced Heirs” in Italian Inheritance

Italian law provides for legitimate heirs

legitimate heirs in Italian inheritanceAlthough a testator may have expressed wishes in a Will, certain people have a legal right to receive at least a portion of an Italian inheritance. These are all so-called, “legitimate heirs”, or “forced heirs”.

The testator only has one portion of assets to dispose of freely, which varies between a quarter and a half of total assets. This is defined as the, “available quota”.

The remainder of an Italian inheritance is legally designated. This portion goes to a testator’s spouse (or registered partner), children and, in the absence of children, if they are still alive, the testator’s parents.

Legitimate Heirs: what are inheritance quota rights?

If there is only one child, s/he is due at least half of the decedent’s total assets. This becomes a third of assets if the decedent’s spouse or registered partner is still alive. A child would therefore be entitled to inherit a third of the assets.

In the case where there are two or more children, they divide two thirds of the inheritance between them. A surviving spouse or registered partner is entitled to a quarter of the assets, children’s quota decreases to half of the assets. If one or more children pre-decease the testator or renounce an inheritance, their descendants qualify to receive that entitlement.

Where the decedent and surviving spouse or registered partner have no children, the surviving partner is entitled to at least half of the assets.

Parents and other ascendants of the deceased only become legitimate heirs in the absence of descendants. Parents have the right to a third of the inheritance, reduced to a quarter if the decedent’s spouse or registered partner is still alive. The latter is legally entitled to half of the assets.

Regarding property pre-owned by the deceased or owned in common by the spouses or registered partners. The surviving spouse or registered partner has the right to (i) remain in the family house and, (ii) retain all movable assets in the property. In this case, if there are any other co-heirs, there is no requirement to pay property tax on their portion of inheritance. Tax liabilities remain with the spouse or registered partner, even if s/he renounces the inheritance. 

What about the inheritance rights of separated couples?

In cases of a legal separation, the spouse or registered partner loses inheritance rights if a court judgement finds s/he was to blame for the breakdown of the marriage or registered partnership.

Surviving spouses or registered partners who have no court judgement regarding their separation are not legally separated. They therefore have the same inheritance rights as a non-separated spouses and partners. This would also be the case where no assignment of responsibility for the breakdown of the marriage or registered partnership exists.

In other words, the loss of the right to an inheritance relates only to court-issued judgements of separation. The law, in accordance with article 151 of Italian Civil Code, deems a couple to still be in the marriage or registered partnership if their separation was a personal decision and did not go through the courts.

Legitimate heirs and reserved quotas in Italy

Legitimate heirs Reversed quotas and availability
Spouse (or registered partnership) (in the absence of children and parents) 1/2 to the spouse (or registered partner) = 1/2 available quota
One child (in the absence of a spouse or registered partnership) 1/2 to the child = 1/2 available quota
Two or more children (in the absence of a spouse or registered partnership)  2/3 to children (divided into equal parts) = 1/3 available quota
Spouse (or registered partnership) and only one child 1/3 to the spouse (or registered partnership) 1/3 to the child = 1/3 available quota
Spouse (or registered partnership) and two or more children 1/4 to the spouse (or registered partnership)  1/2 to children (divided in equal parts) = 1/4 available quota
Spouse (or registered partnership) and parents (in the absence of children)  1/2 to the spouse (or registered partnership)  1/4 to parents (divided into equal parts) = 1/4 available quota
Parents (in the absence of children and spouse or registered partnership)  1/3 (divided into equal parts) = 2/3 available quota
If there is a Will, the law reserves a quota of inheritance only for the spouse (or registered partner) and children (if the deceased had no children there is a reserved quota for parents who are still living), so if the Will is valid, other relatives cannot make claims.  

 

Finally …

Italian inheritance is a complex matter. In addition, if you own assets in more than one country, this can further compound the complexity. We recommend you seek independent legal advice regarding your personal situation. If we can be of assistance, please get in touch.

For more information about Italian succession and inheritance, you may find our Italian Succession Guide useful.

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

 

Italian Estate Tax

Italian estate tax (imposta di successione)

Italian estate taxAlthough the government abolished Italian estate tax in 2001, it subsequently reintroduced it in 2006.

Italian estate tax is therefore applicable to succession cases prior to October 25, 2001 and those from October 3, 2006 onwards.

In order to comply with the fiscal rules of inheritance law, heirs need in the first instance to file a statement of succession with the Italian tax authorities.

Who is liable for Italian estate tax?

If the deceased was resident in Italy at the time of death, Italian Inheritance Tax applies to the deceased’s worldwide assets. However, if the deceased lived outside Italy, Italian estate tax is only payable on assets located in Italy.

Of course, in order to prevent issues with double taxation, Italy has a number of cross border taxation arrangements in place, including with the UK and the USA.

Unity of inheritance

Italian inheritance law is based on the principle of ‘unity of inheritance’. To clarify this, the law of the country of last domicile deals with any movable assets. Movable assets could, for instance be furniture, cars, jewellery, works of art, bank and post office current accounts, money, investments such as shares, bonds, trust and managed funds.

On the other hand, immovable assets are dealt with according to the law of the country wherever they are located. Examples of immovable assets include houses, shops, buildings, agricultural or building land.

How does Italian estate tax work?

While Italian estate tax appears less onerous, in terms of payments, compared to some other EU Member States, it is nevertheless complex.

In effect, Italian estate tax applies to the net value of the deceased’s estate. This therefore, includes not only movable but also immovable assets.

In addition, equity in non-family businesses and shareholdings in companies are taxable. However, there are exceptions to this.

Indeed, because the range of taxable assets is so broad, it is important to review the balance of ownership of your assets in the above mentioned categories. Above all, if you have children or you stand to inherit assets from an Italian estate.

It may moreover, also be worthwhile considering property ownership changes to protect your assets. In addition, some careful estate planning for the transfer of assets within the family is crucial.

Italian estate Tax on property

As far as a property is concerned, it is important to bear in mind the income value of Italian real estate property. This is calculated on the capitalised cadastral annuity.

In order to ascertain the cadastral value of a property, re-evaluation coefficients are as follows.

– Agricultural land: €112,50

– Buildings – Cat. C/1 and E: € 42,84

– Buildings – Cat. A/10 and D: €63,00

– Buildings – Cat. B: €147,00

– Other buildings: €126,00

– Habitable buildings, primary residences and relative appurtenances: €115,50

Depending on the relationship to the deceased and the category of assets, tax is applied proportionally to individual heirs or legatees.

The table below summarises quotas and exemptions from inheritance tax relating to Italian real estate property:

BENEFICIARY INHERITANCE TAX ASSET CATEGORY REGISTRATION TAX CADASTRAL TAX
Spouse and/or Children Value of assets & rights: 4%

Below €1 million value, tax-exempt.

  • Primary Residence
  • Other property
  • Other assets
€200

2%

€ 168

1%

Siblings Value of assets & rights: 6%

Below €1 million value, tax-exempt.

  • Primary Residence
  • Other property
  • Other assets
€200

2%

€ 168

1%

4th Degree Relative Value of assets & rights: 6%
  • Primary Residence
  • Other property
  • Other assets
€200

2%

€ 168

1%

Other Value of assets & rights: 8%

 

  • Primary Residence
  • Other property
  • Other assets
€200

2%

€ 168

1%

Additionally, in accordance with the Italian Disabilities Act, the threshold from which disabled beneficiaries are liable for inheritance tax is €1.5 million.

Furthermore, quotas mentioned in the table above also apply to lifetime use (usufruct) of a property title deed.

What is excluded from Italian inheritance tax?

As previously mentioned, according to Italian inheritance tax law, certain categories of assets are exempt from Italian inheritance tax. These include government bonds and unit linked whole of life insurance policies. Additionally, shareholdings in family businesses and certain charitable donations are exempt.

EU regulations

Choice of law

In addition to Italian inheritance law, it is also worth mentioning EU succession regulations introduced in 2015.  In brief, these regulations provide testators with an opportunity to amend the Italian principle of unity of inheritance.

As a result of EU succession regulations, non-Italians who are resident in Italy can make a choice of law in their will. In other words, a testator can stipulate that they want the law of their own country, or nationality, to govern their Italian-based assets.

Furthermore, EU regulations do not restrict the choice of law to EU nationals resident in Italy. For example, a US national could nominate US law to apply to the succession of their property in Italy.

It should however be mentioned, that nominating a country law needs careful consideration. Given that a testator needs to take in to account matters such as foreign matrimonial regimes, usufruct, tax consequences, joint ownership structures and other foreign proprietary rights with respect to an estate, it would be wise to seek advice before acting.

European Certificate of Succession

In order to facilitate cross border successions, an additional benefit of the EU succession regulations is the European Certificate of Succession. While this document is issued by the relevant authority dealing with the succession, heirs, legatees, executors and administrators of an estate can use it to prove their status and thereby exercise their rights or powers in other EU Member States.

Finally …

As can be seen, Italian inheritance is a complex matter. While there are actions that you can take to mitigate the impact of Italian inheritance tax law on estates, because each case is different, you should seek professional support and advice.

At De Tullio Law Firm, we have over 55 years of expertise managing cross border succession and estate planning matters throughout Italy. Our firm is also a full member of STEP, the world’s leading association for trust and estate practitioners.

Please contact us if you have any estate tax questions or if would like to discuss your situation.

You may also be interested in Inheritance Law and Taxes

Selling Property in Italy. A Short Guide

The Italian sales process and possible issues for vendors

A Short Guide To Selling Property in ItalyWhen selling property in Italy, certain legal issues need serious consideration. Due to differences in legal systems, a real estate transaction in Italy can appear like a difficult and protracted process for foreign investors.

The Italian law is complex. If you don’t fully understand how it works, you may expose yourself to risks. Considering the high stakes involved in a real estate transaction, you should seek legal advice. You should always choose your own lawyer to avoid possible conflicts of interest.

Selling property in Italy is organised in three stages:

  1. Marketing and Reservation offer
  2. Negotiation and signature of the preliminary contract
  3. Completion of the sale

The first stage is to put the property on the market

Vendors can market a property themselves or through an estate agency

If you are considering appointing an Italian real estate agent, it is important to ensure that the agent is qualified and registered with the local Chamber of Commerce. Registration not only guarantees the professional qualification of real estate agents but also ensures they have professional indemnity insurance.

Unregistered estate agencies could be liable to prosecution for carrying out a reserved activity. This carries the risk of fines and other penalties such as not being entitled to commission fees. The agent is in fact, usually paid a commission (Provvigione) both by the buyer and the vendor. Such a commission is negotiable but generally equivalent to 3% of the sale price.

Frequently, real estate agencies require foreign nationals to sign their standard terms of engagement. These need careful evaluation before signing. It is of course key to assess terms and conditions of the brokerage fees. In addition, however, it is important to understand minimum sales price, duration of the mandate and its exclusivity.

Reservation offer

If a potential buyer chooses your property, they would generally sign the first legally binding document called a, “reservation offer”. If you accept the offer, you need to sign off on it and return it to the buyer. In addition, the buyer should pay a small deposit. The reservation offer effectively removes the property from the market for a period of time.

Due diligence

During the period the property is off the market, the buyer should start the legal due diligence process. This means carrying out checks and searches. It should include surveys, planning and local authority (Comune, Building and Land Registry) searches. Checking local planning, zoning and building regulations is also important.

Amongst others, the buyer will want to ascertain the following points prior to moving on to the next stage of the purchase process.

  • The property exists. It is as in the description and, the seller has the legal right to sell the property.
  • There are no mortgages/charges or any third party rights or other undisclosed encumbrances affecting the property.
  • The property complies with all local planning, zoning and building regulations. Or, where relevant, building plans have consent from the Local Authority (Comune).
  • The property is fit for human habitation, unless selling to reconstruct. A certificate to this effect (Certificato di abitabilità) should be available.
  • The seller has complied with all the relevant Italian tax legislation by lodging tax returns and paying income tax (Imposta sui Redditi), which may have been due in the previous tax years. In default of this requirement, the property may legally be unsaleable. If the vendor is a trader or a company, they should not be bankrupt (Fallito), and no application to this effect should be pending against them.
  • Where the property is in an apartment building (Condominio), all service charge payments should be up to date.

The second stage is negotiating and signing a preliminary contract (Compromesso)

When selling property in Italy, the vendor must ensure that all the statements contained in the contract are true to the best of their knowledge. This means full disclosure regarding the property. Any specific enquiries raised by the buyer must be addressed truthfully.

Preliminary contract deposit

Generally, signing a preliminary contract entails the buyer paying a deposit. This can range between 10% and 30% of the sales price of the property. The implication of such a payment is that in the event the purchaser subsequently backs out of the preliminary contract, the purchaser will automatically lose the whole deposit. Should the seller breach the preliminary contract by backing out, they are required to refund the buyer double the amount of the deposit. In addition, further sums may be payable, if there is proof that damages exceed the amount of the deposit.

Italian law states that both parties to a prospective transaction must act in good faith

Prior to signing a preliminary contract, the seller must provide the buyer, or their legal advisers, with copies of all documentation relating to the property. In addition, the seller must inform them of any material fact which may affect the decision of the buyer to proceed with the purchase of the property.

It is important to ensure that the property complies with all applicable planning and building regulations. Any breach of this legislation may result in the rescission of the purchase contract and heavy penalties. Where the seller has applied for a planning amnesty (Condono Edilizio), the prospective buyer should receive copies of the relevant documentation.

Certificate of habitability

Note that before or at the latest upon completion,  the seller must produce the property’s certificate of habitability (Certificato di abitabilità). The local municipality is responsible for issuing a certificate. It confirms compliance of all the systems installed in the property with Italian law and in respect of the relevant health and safety regulations. This certificate is mandatory. It goes without saying that it is, therefore, advisable for the seller to obtain this certificate prior to signing a preliminary contract and payment of the relevant deposit. Otherwise, the seller may run the risk that the transaction falls through. This would put the seller in a position of breach of contract.

To avoid possible claims and penalties, should a certificate of habitability not be available on exchange of contracts, the seller should disclose the issue prior to signing a preliminary contract and the contract should state either that the buyer is renouncing receipt of the certificate of habitability or alternatively that completion of the purchase is conditional on the seller obtaining this certificate.

Mortgages

If the property is subject to a mortgage, the seller has a duty to redeem the same and cancel the corresponding entry on the Local Land Registry before completion of the sale.  If the buyer is purchasing the property using a mortgage, it is advisable to finalise all the arrangements before signing a preliminary contract. However, this process may become expensive and protracted for the prospective buyer.

Pre-emption rights when selling property in Italy

Particular care should be taken if the sale is a villa or land with statutory farming pre-emption rights (Prelazione agraria) by owners or tenants or immediate neighbours in agricultural areas in Italy. According to Italian law, farmers, tenants and neighbours are entitled to be notified of a proposed sale of a property to third parties. They have first option on buying agricultural land in their immediate neighbourhood. Therefore, immediately before, or if this isn’t possible, after signing the preliminary contract, it will be necessary for the seller to serve a copy of the contract on all parties having pre-emption rights, so that any person with an interest can declare within the statutory term (usually 30 days).

It is important to ensure full compliance with this legislation. A breach of statutory farming pre-emption rights may result in a claim on the property. Anyone making a claim can do so up to a year after the sale. This in turn, would give the buyer a legal claim against the seller.

Breaches can have serious consequences

Essentially, at this stage, the seller should disclose any breaches pertaing to the property as well as proof of remedial action.  This includes any missed tax payments and outstanding breaches or notices from relevant authorities.

These are just some of the points to take into consideration, but there are many others. All have potentially serious consequences for the vendor. It is therefore important that the vendor acts in good faith. A claim for damages based on misrepresentation is just one of the consequences that the seller should aim to avoid.

Selling property in Italy. The third stage: completing the sale

This usually takes place in the offices of a notary (Notaio). In Italy, vendors and purchasers often use the same notary, but you are perfectly within your rights to have your own notary.

A notary must oversee completion of Italian property transactions

Italian Notaries are officials entrusted by the law to transfer the legal title of an Italian real estate. They have a duty to correctly draft the Deed of Sale (Rogito), to ensure its proper execution and registration. In addition, on behalf of the Italian State, they collect payment of all Italian taxes ancillary to the completion.

While notaries are qualified lawyers, Italian law prohibits them from acting on behalf of any of the parties involved in a transaction. They must remain impartial. Only your own lawyer may offer legal advice to protect your interests.

Before completion the vendor should provide the Title Deeds. This could be the Purchase Deed, or the Italian Inheritance Tax Return lodged with the tax authorities. The vendor will also need to produce all the relevant documentation pertaining to the property. This includes for example, planning and building licenses. And, if the sale is of a building, rather than land, an Energy Performance Certificate and a certificate of Habitability.

All parties have a legal duty to provide the notary with information regarding the sale price and the appointed estate agency. This information will appear in the Deed of Sale, in the form of a solemn affirmation under oath (Dichiarazione sostitutiva di atto di notorietà). If this information is missing, incorrect or incomplete, the parties risk a harsher form of taxation on the sale of the property, plus substantial fines.

Fiscal matters

If the vendor benefits from “prima casa” (first home) fiscal reductions, there will be a penalty to pay if resale takes place within five years of the original purchase. The seller can however avoid penalties if they buy a new residential property in Italy within one year of the sale.

Following completion, the seller may be subject to Italian capital gains tax. However, no tax is usually levied if the vendor has owned the property for more than five years.

Finally …

As a general rule, it is wise to familiarise yourself with the legal framework regulating international property sales. If you are thinking of selling property in Italy and would like more detailed information, you might like to read the full version of our Selling Italian Property Guide.

For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice throughout Italy. We are specialists in cross border property, inheritance and family law.

If you are in need assistance selling property in Italy, we are here to help. We can guide you through the whole process or even organise the whole process on your behalf. Get in touch with us for a free preliminary consultation.

 

 

 

Buying An Italian Property. A Short Guide

This short guide aims to cover the key elements of the Italian purchasing process

For a more in-depth explanation, you may wish to read our comprehensive Italian Property Buying Guide.

Italian Property Buying GuideBuying an Italian property proceeds through 3 key stages:

– Proposta irrevocabile d’acquisto (Reservation offer)

– Contratto preliminare di vendita (Preliminary contract)

– Atto di vendita (Deed of sale)

Once you have chosen your property you should engage the services of a solicitor, whether you buy through a real estate agent or directly from the vendor.

The knowledge that an Italian solicitor has about Italian real estate law is invaluable – plus, your own solicitor is there exclusively to look after your interests.

The first stage. Reservation offer

When buying an Italian property, the first document you will have to sign is a, “proposta irrevocabile d’acquisto” (reservation offer). This is normal practice when purchasing through an estate agent

In contrast, when purchasing directly from the seller (a private sale) a reservation offer is unusual. The implications of dispensing with a reservation offer is one of the many reasons why you should seek legal advice.

By signing the proposta irrevocabile d’acquisto, you secure the removal of the property from the market for a limited period of time, normally 15 days.

It is important to highlight that a reservation offer is only binding upon the buyer when formal written acceptance of the offer has been received from the vendor. Once the agreement has been signed by both parties, it becomes a legally binding contract.

First deposit

You will need to pay a small deposit, which is normally held by the estate agent or solicitor until the vendor has formally accepted the reservation offer.

Should you finalise the purchase, this deposit becomes a part payment of the purchase price. If the seller does not formally accept the offer, your deposit will be refunded.

Due diligence

While the property is off the market, your solicitor, assisted by a surveyor, will make all the necessary searches to ascertain that the property doesn’t have any debts, mortgages, claims etc. Due diligence checks and searches ensure there will be no unpleasant and possibly costly surprises during or after the purchase.

The second stage of buying an Italian property. Preliminary contract

Normally at this stage, buyer and seller having agreed to go ahead with the conveyance, will formalise their agreement through a “contratto preliminare di vendita” (preliminary contract)

Some estate agents (and especially in the case of private sales) choose, or recommend, leaving out this part of the purchase process. However, this legal document really is essential. It sets out the detailed terms and conditions of the sale.

Estate agents often use boilerplate preliminary contract templates. These may not be suitable for your personal situation. Your purchase may be subject to certain terms and conditions. For example, you may have come across some structural issues during due diligence and want to make your purchase contingent on a surveyor’s report. This condition would need to be in the preliminary contract. A solicitor can draft the contract, or at least to examine the estate agent’s template and advise you on any implications before you sign it.

Second deposit

One of the essential legal elements of the preliminary contract is the payment of a deposit (caparra confirmatoria). This is normally equivalent to a minimum of 10% of the purchase price.

If you back out of the contract without a valid legal reason, you will lose this deposit. On the other hand, if the seller changes their mind about the sale, they will have to refund your deposit in full. You would also have the right to claim an amount equal to the deposit through the Italian courts.

In the preliminary contract, the parties also set the date to finalise the conveyance in front of the public notary.

The third Stage of buying an Italian property. Completion of the sale

By law a notary must oversee Italian property transactions. The notary is a public official who has State authority to validate contracts transferring the ownership of a property. The notary is also responsible for paying all land registry fees and cadastral taxes.

A notary must remain absolutely impartial

A notary may not therefore offer legal advice to any party involved in a property transaction. The notary cannot therefore act as a substitute for a solicitor in terms of representing the interests of the buyer.

In order to ensure you have proper legal safeguards, the only way is to engage the services of an independent solicitor. Only by having your own solicitor, can you be confident that no unpleasant surprises will be revealed at this late stage of the purchase process.

Deed of sale

Buying an Italian property concludes with the, “atto di vendita” (deed of sale).

The deed of sale is drafted by the notary and has to be fully compliant with the preliminary contract. In other words, the preliminary contract dictates all the essential elements of the transaction.

Translation

Should any of the parties not understand the Italian language, Italian law requires a translation of the deed of sale. Unless you have an Italian solicitor who speaks your language, the notary may also require that a qualified translator be present at the signing.

Unlike a translator, the advantage of having a solicitor with you is that should any last-minute legal issues arise at the signing, your solicitor will be able to immediately resolve these.

You should be aware that the Italian version of the deed will prevail in a court of law if any issues arise at a later stage.

Signing day

On the appointed signing day, all parties to the transaction convene, usually at the notary’s office. The notary reads the deed aloud and all parties then sign it in front of the notary. Once signed, the buyer pays the balance of the purchase price to the seller and the new owner receives the keys of the property.

New owners can collect a copy of the deed from the notary approximately one month after the signing. It takes approximately one month to register the deed at the relevant land registry office.

If the buyer cannot be present to sign the deed of sale in front of the notary, the buyer can give a power of attorney to their solicitor. This will permit the solicitor to sign the deed of sale on the buyer’s behalf.

Finally …

As a general rule, it is wise to familiarise yourself with the legal framework regulating international property sales.

For over 55 years, De Tullio Law Firm has been providing international clients with independent legal advice throughout Italy. We are specialists in cross border property, inheritance and family law.

If you would like further information about buying an Italian property, we are here to help. We can guide you through the whole process or even organise the whole process on your behalf. Get in touch with us for a free preliminary consultation.

Buying an Italian property. Glossary
  • Proposta irrevocabile di vendita: An initial formal offer with a small deposit. It contains the price you are willing to offer and any conditions.
  • Contratto preliminare di vendita: This contract sets out, in detail, the terms and conditions of the sale and also all the relevant cadastral and land registry information. Also called a, “Compromesso”.
  • Caparra confirmatoria: Italian Civil Code regulates this deposit under art.1385 of the. If a deposit is defined as a “caparra confirmatoria” its payment gives rise to legal rights and obligations on both parties.
  • Atto di Vendita: All parties sign the deed of sale in front of a public notary. The buyer makes outstanding balance of payment and receives the keys to the property. Also called a, “Rogito”.

Italian Inheritance Law Services

Italian Inheritance law: De Tullio Law Firm's servicesItalian Succession 

For over 55 years, De Tullio Law Firm​ has been providing clients worldwide with clear-sighted Italian inheritance law services.

Roman law

As Italian succession law is based on the principles of Roman Law, it provides some protection to close members of the family. This therefore partially limits the right of the testator to dispose of his/her own assets.

Testamentary Succession is defined as the assignment of hereditary assets in compliance with the wishes of the testator as set out in an Italian Will. Whereas, in the absence of a Will, inheritance is devolved following the principles of Legal Succession. In other words, where there is no will, succession law gives rights to a number of legitimate heirs. This means that certain heirs have the legal right to inherit a portion of the deceased’s estate.

Known as legitimate, reserved or forced heirs, these beneficiaries are the spouse or registered partner of the deceased. Thereafter, beneficiaries include relatives identified by law as those closest to the deceased. For instance, children, parents and relatives up to the 6th degree of connection.

Italian succession law reserves a significant quota of inheritance for these beneficiaries. Because they are defined as forced heirs, it means that a testator cannot exclude them from inheriting, even with a Will.

However, when drafting an Italian will, the testator is free to dispose of a part of his assets known as the, “disposable quota”. This allows the testator to assign part of their assets to non‐relatives or organisations such as charities.

Our Italian inheritance law services

– Italian inheritance rights assessment

– Drafting Italian Wills

– Claiming / recovering inherited Italian property

– Italian property, titles, records searches

– Legal support for the sale of inherited Italian properties

– Obtaining appraisal and or a survey of inherited Italian property

– Determining Italian inheritance tax

– Obtaining copies of public Wills

– Challenging Wills drafted in conflict with the Italian legislation

– Managing Italian probate

– Registering inherited property in the name of heirs

– Obtaining release of inherited funds deposited in Italian banks

Read more about our Inheritance Services.

Finally …

If the deceased was resident in Italy at the time of death, Italian Inheritance Tax applies to the deceased’s worldwide assets. However, if the deceased lived outside Italy, Italian estate tax is only payable on assets located in Italy.

If you own assets in Italy, we recommend that you draft an Italian Will. And, if you need help with Italian estate planning, we can support you.

At De Tullio Law Firm, we have over 55 years of expertise with managing cross border succession and estate planning matters throughout Italy. We offer a full range of Italian inheritance law services. In addition, our firm is also a full member of STEP, the world’s leading association for trust and estate practitioners.

For additional information about Italian succession and inheritance, you may find our Italian Succession Guide useful.

If we can be of assistance, please get in touch at: info@detulliolawfirm.com

 

You may also be interested in our inheritance videos.