Tag Archive for: Italian Attorney

Buying Italian Property. Advice for Expats

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If you are buying Italian property, never sign any paperwork without fully understanding the implications

The most important piece of advice for expats buying Italian property is that they should never sign any paperwork without getting it checked.

If you don’t fully understand all the legal implications of paperwork, your signature could result in potential financial and/or legal problems. In addition, your signature may negate any possibility of complaints at a later date.

We would always recommend that you use an experienced, independent property lawyer to safeguard your Italian purchase. A surprising number of expats buying Italian property don’t use a lawyer. Instead, they take a DIY approach or use someone unqualified such as the estate agent or vendor. It is not uncommon that this ends up being a stressful and expensive mistake.

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Expats buying in Italy may encounter language barriers

If you are not a fluent Italian speaker, it’s important to engage a lawyer who speaks your language. This ensures you not only have crucial legal advice but also a someone who can act as a legal translator. As previously mentioned, the issue of signing paperwork is critical. Expats should only sign documents that they fully understand, which may mean that documents need translating. In fact, when you complete the purchase, the Italian notary may require a translation of the deed of sale. In addition, you may also have to engage an interpreter at completion. However, if you have a lawyer who speaks your language, this will not be necessary.

In order to avoid conflicts of interest, the lawyer should be independent of the estate agent and/or the vendor.

Make sure your lawyer has a license to practice. In other words, your lawyer should be a member of the Italian Bar Association. The lawyer should also have public liability insurance.

Estate Agents

It is worth bearing in mind that regardless of how charming and friendly an estate agent is, at the end of the day, an estate agent is a sales person working on a commission from the sale of the property. They are not qualified to provide legal advice and do not conduct due diligence on properties. The base their sales information on what the vendor tells them.

An estate agent may ask you to sign an agent’s brokerage contract, which could include up front fees.

Make sure that your estate agent is from a reputable company. Italian estate agents must register with their local chamber of commerce. They should have a certificate issued by the local town hall as proof of their professional registration.

Surveys

Many expats buying Italian property decide not to invest in the knowledge and expertise of a professional surveyor.

Construction quality varies hugely in Italy and you cannot know everything about a property just from viewing it with the vendor or estate agent. Buyers should ensure the property they want to purchase is actually worth the money they are paying. This means checking there are no fundamental problems. Amongst other things, structure, planning, zoning, ownership and geological location.

Certificate of Habitability

It’s also surprising how many expats buy a property that has neither electricity nor water connections. If a property has no utility connections, it may indicate a problem. It suggests that the property may not have a Certificate of Habitability. If this is the case, the property may never gain mains utilities despite what the vendor or estate agent claims. When it comes to reselling the property, later on, it is likely to be a struggle to find a buyer.

Buying an Italian off-plan property

Expats should exercise caution if buying an off-plan property. There are many risks entailed with buying Italian off-plan property. One of the major risks is that a developer becomes insolvent during the build. Never make large payments as a deposit to secure what appears to be a dream home.

Ensure, amongst other things, that the developer or building company has a building licence for the property before parting with any cash. Don’t be afraid to ask the property developer about their portfolio, their history of delivering quality buildings, on time. Ask for references. If you are buying a resale property, check that there are no hidden fees or legal complications.

Take your time. Don’t be rushed

When buying a property in Italy, don’t rush into a purchase and, never buy a home on impulse. Think long term. Always assess the pros and cons, research the area and understand all the present and future legal and tax aspects.

Familiarise yourself with the process of buying Italian property

Because the process of buying a property in Italy can move quickly and expats should be prepared for the purchase completion taking between four to eight weeks on average.

The purchasing process in Italy is completely different to the UK, the USA and many other parts of the world. First, the buyer makes an offer on the property. If it’s accepted, then the buyer and vendor will sign a reservation offer and the buyer will pay a small deposit. Second, the buyer and seller will sign a preliminary contract at which point the buyer will pay another deposit, usually a minimum of 10% of the sale price. Finally, at completion, the new owners pay the balance of the sale price, along with other costs and taxes.

It is important that expats appreciate all the financial and legal implications of each stage of the process.

Finally …

For 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. Our particular expertise is in cross-border real estate, family law and inheritance matters. If you would like more information, or you need advice and support with your Italian property purchase, please get in touch with us.

Usucapione Property Rights in Italy

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What are usucapione property rights?

Usucapione property rights in Italy date back to Roman law. The closest terms to Usucapione in common law are limitation of rights and adverse possession.

According to Roman law, so long as someone didn’t take possession of an asset through theft or force, usucapione allowed them to become the lawful proprietor of the asset. The legal owner had a certain period of time to re-claim the asset, but if this didn’t occur, the title passed to the possessor.

Later, Napoleonic law also incorporated Usucapio laws. Today, elements of the legislation still exist in Italian law.

Current usucapione property rights concern the uninterrupted and unchallenged use of an immovable asset by someone who does not actually own the title. This may be land or a building.

Adverse possession is one of the most contentious ways of acquiring a property. Generally, in order to apply to register a title to a property, the adverse possessor of the land or building will have been in possession of, or using the property for 10 years, although there are provisions which extend this to 30 years.

Legally, at the end of the relevant time period, the adverse possessor can apply for a court judgement to become the registered owner of the land or building in question.

Basic requirements of adverse possession

There are five basic requirements that an adverse possessor must meet to successfully claim usucapione property rights:

1. Actual Possession

The adverse possessor must have actual, physical control over the property.

2. Open and Notorious Use

The use and possession of the land must be visible and apparent. This gives notice to the legal owner that someone may make a claim to the property.

3. Exclusive Possession

The adverse possessor cannot occupy the land jointly with the owner or share possession in common with the public.

4. Hostile Possession

Adverse possession must be hostile to the title owner’s interest in the property. The word “hostile” in an adverse possession claim does not mean showing ill will or that the adverse possessor and legal owner are enemies. Rather, it means that the adverse possessor maintains that he or she holds the property as an owner against all other claims to the land.

5. Continuous and Uninterrupted Use

All elements of adverse possession must be met at all times through the relevant period of time. Occasional activity with long gaps in activity therefore fails the test of continuous possession.

Usucapione property rights case

In 2001, a US national inherited a house and land in Italy from an elderly Italian aunt. The nephew had spent many enjoyable summer holidays on the property when he was growing up. He remembered a strip of land between his aunt’s house and the neighbouring property. When his aunt was alive, a neighbour used to cultivate vegetables there. The nephew assumed that the vegetable plot belonged to the neighbour, who was a distant cousin.

Following the aunt’s death, the neighbouring cousin offered to look after everything for the nephew. For many reasons, this seemed like a good idea at the time.  The nephew therefore entrusted the property’s maintenance to his distant cousin. The cousin looked after the American nephew’s property well and continued to use the strip of land between the properties. In fact, the cousin had it fenced and built a patio, barbecue area and a gazebo.

In the summer of 2013, the American nephew retired. He and his wife decided to move to Italy. The nephew decided to have his property surveyed. He discovered in fact, that he owned the land between his and the neighbouring cousin’s property. The question was, did the nephew really own the land anymore? Because of  his cousin’s open and unchallenged use of the property for over 30 years, if the case went to court, it would likely rule against the nephew’s property rights.

Do you find yourself in a similar case?

If you are an Italian property owner, and you do not dispute the use of your property, where do you stand? You, as the legal owner, may well be deemed to have abandoned your property rights. There are several elements needed for adverse possession to apply for title transfer and registration:

– Length of time (10 – 30 years depending on the case).

– Use of the property must be open for all to see.

– Possession must be hostile to the legal owner of the land.

– Gaining a title to property through usucapione requires a court judgement.

As we have seen, usucapione can have a dramatic impact on land ownership rights. An encroachment could result in the title of your property being transferred to an adverse possessor. Under these circumstances, you might have to bring a lawsuit for trespass in order to prevent someone from obtaining the title to your property.

For example, someone who has no legal entitlement to a parcel of your land may have been openly using that land to cultivate vegetables for a decade or more. You, as the legal owner of the land, may even have periodically received some of the produce as a gift. From a legal point of view, this could imply your tacit agreement to the cultivator’s adverse possession of a piece of your land.

Conducting appropriate property searches is vital

If you are considering purchasing property or land in Italy, it is important that you don’t sign any documents or paperwork before conducting appropriate searches. Amongst other things, you should check whether there are any usucapione issues. It is vital to understand exactly what you are buying, where the boundaries are and what type of easements, such as rights of way exist.

Finally …

Purchasing a property anywhere is a major financial commitment for most people. Make sure you safeguard your conveyancing. We would always recommend that you seek independent legal advice before making any legally-binding commitment.

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.

For more comprehensive information about the Italian property purchasing process, you might like to read our guide. You may also like to watch our info videos about Italian property law.

Italian Property Survey – Need One Or Not?

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Should you have a survey before you buy property in Italy?

Because for most people buying a property is a major expense, not commissioning an Italian property survey is a false economy.

A surveyor, “geometra”, will provide you with invaluable information and support during the property purchasing process. This information will help save you money both prior to and after completion.

Buyer beware!

In Italy, property is purchased under the principle of ‘caveat emptor’ or ‘buyer beware’. In other words, the onus is on the buyer to ensure that there are no issues with the property. This includes land purchases.

If you purchase an Italian property and subsequently discover a problem, it is always time-consuming, frustrating and costly to resolve.

Get Your FREE Guide to Buying Property in Italy

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Amongst other things, an Italian property survey will reveal hidden defects, illegally built structures, planning and zoning issues. In addition, a geometra will highlight any areas of the property that require repair or maintenance. It is important to be aware of all these issues. After completion, you will have to pay to rectify any defects. You may even have to take legal action through the Italian courts to get a refund from the vendors.

An Italian property survey can save thousands of Euros

It is important to make sure you are not overpaying for your Italian property. A common misconception is that the vendor’s or estate agent’s valuation is based on Italian property market prices. Obtaining a valuation as part your survey will give you the true value of a property. The valuation will take into consideration any defects uncovered and repairs needed. This will ensure you pay a fair price for your property. A survey can therefore save thousands of Euros.

The importance of an Italian property survey

The support of a surveyor during the home buying process is invaluable, but it can also be extremely useful after completion. Depending on the type of survey you commission, the report will give detailed information about parts of the property that may require attention in the future thus allowing you to budget those costs going forward. In addition, a surveyor can give you preliminary advice on any plans you may have to extend or alter the property in the future.

Finally …

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.

We can guide you through the whole purchasing process or organise the whole process, including an Italian property survey, on your behalf. Get in touch with us.

If you would like further information about buying an Italian property, you may find our buying in Italy guide useful.

 

The Italian Rent to Buy Scheme. Information And FAQ

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Introducing the Italian rent to buy scheme

In September 2014, the Italian parliament introduced measures to revitalise the property real estate sector. Measures include an Italian rent to buy scheme as part of the Sblocca Italia – Unlock Italy – decree (Article 23 of Legislative Decree 133/2014).

The Italian rent to buy scheme has two main aims. Firstly to help people purchase a property and secondly to support builders and developers sell property stock.

The Italian rent to buy scheme is similar to the UK model

It allows a promissory purchaser to immediately start living in a property as a tenant and provides the option to purchase the property at a later date.

As a tenant, the promissory purchaser pays a regular rent. In effect, this postpones the purchase of the property until a specified future date. Purchase should take place no more than 10 years from the start of the rent to buy contract. Rental payments reduce the overall property price.

Get Your FREE Guide to Buying Property in Italy

Our PDF guide covers every aspect of the buying process so you're ready to purchase with confidence

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Decree 133/2014 addresses and resolves problems that stemmed from the lack of specific legislation in this domain. Notably, the decree provides for the legal transcription of a rent to buy contract in the land registry for the duration of the contract.

Essentially, the land registry transcription counts as a full and proper reservation of the purchase of the property. Consequently, the owner of the property cannot sell it to anyone else for the duration of the contract.

No mortgages or easements or any other prejudicial rights can be held on the property. Creditors of the property owner / vendor will neither be able to register a mortgage on the property, nor foreclose on it.

As soon as a rent to buy contract is in the land registry, this guarantees that the property is reserved for the promissory purchaser. Any other transcription or registration will be unenforceable against it.

Frequently asked questions about the Italian rent to buy scheme

What is a rent to buy contract?

The contract combines a rental contract and a preliminary contract of sale for a specific property. This means that from the outset of the contract, the owner/vendor gives the promissory purchaser the right to buy the property. The promissory purchaser is able to live, as a tenant, in the property and pays a regular rent. After a contractually agreed period of time, but not more than 10 years, the promissory purchaser may decide to buy the property. The owner must deduct rent paid during the term of the rent to buy contract.

Example: Consider the sale of a villa for €100,000. The monthly rent is €1,000 per calendar month. A part of this rental payment, €500, is the rent payment for living in the property, as if it were a normal rent. The remaining €500, counts toward the purchase of the property. In effect, this portion of the monthly rent constitutes a down payment on the sales price.  If the term of the rent to buy contract is 5 years and at that point, the promissory purchaser decides to buy the property, rather than pay €100,000, the promissory purchaser pays the outstanding EUR 70,000. This is because €30,000 has already been paid as part of the rent to buy scheme.

Is the promissory purchaser obliged to buy the property at the end of the rent to buy contract?

The law provides for an option to buy the property. However, there is no obligation. Obviously the parties may agree that the tenant must purchase, but that contract would not be subject to rent to buy legislation. It is merely a private arrangement.

How long does a rent to buy contract last?

The parties to the rent to buy contract establish the period within which the tenant may decide to buy the property. According to legislation,  this must be within 10 years from the start of the rent to buy contract.

What are the benefits of a rent to buy contract for property vendors?

The main advantage is the ability to find a larger number of potential buyers.

What are the risks of a rent to buy contract for property vendors?

There are a couple of risks. Firstly, a tenant may decide not to buy the property. In this case, however, the owner can retain part or all of the rent payments. These should be a sum greater than a normal rental income.

The other risk is that the tenant doesn’t abide by contractual terms, becomes insolvent or causes significant damage to the property. This may mean the property owner has to go to court to evict the promissory purchaser, regain possession of the and free the property from contractual obligations in order to sell it to others.

What does an eviction order entail in terms of time and cost?

The procedure is not strictly-speaking an eviction, but the release of a property. Generally, this is a much shorter and less costly process. Just how long the release of a property takes very much depends on individual courts.

In order to use a property release procedure, the rent to buy contract must contain legally compliant and watertight clauses. You should always seek independent legal advice in structuring the entire rent to buy contract. It is crucial to ensure that you cover everything.

Are there any measures in place to safeguard the owner /vendor?

It is imperative that the rent payments are higher than a normal rent contract. In the event that the sale does not conclude, the retainer payment that the property owner retains serves as compensation.

Commitment to retainer conditions also serves as an indication of the promissory purchaser’s commitment to conclude the transaction at term.

What protection does rent to buy provide for promissory purchasers?

The law provides for the transcription of an Italian rent to buy contract in the land registry. In the same way a deed of sale is managed. A notary – an official of the Italian State –  must oversee the rent to buy contractual process. The contract must be legally compliant. The transcription in the land registry guarantees that the promissory purchaser has agreed to buy a property free of mortgages, liens, foreclosures, or any other detrimental matters, which might arise following the transcription of the rent to buy contract. The land registry transcription is valid for a maximum term of 10 years.

This protection holds even if the property vendor / owner is declared bankrupt during the term of the rent to buy contract.

What type of property can be included in rent to buy contracts?

Rent to buy contracts are valid for any type of property. This includes apartments, houses, farms, garages, vineyards, shops, offices, factories, land.

Are rent to buy contracts also applicable to buildings under construction?

Yes. Rent to buy contracts are applicable to buildings under construction. For contractual purposes, any pre-existing mortgage on the construction must be repaid. If after careful consideration and having taken independent advice, the promissory purchaser wishes to assume a pre-existing mortgage, it is however possible to provide a clause to that effect.

For building and development companies, rent to buy contracts can represent an interesting way to finance mortgage payments for property construction.

Regarding rent to buy contracts for buildings under construction, does the promissory purchaser lose money if the builder or developer goes into administration?

No. The buy to rent contract continues even if the property vendor / owner is declared bankrupt. So long as there is a price agreement in the rent to buy contract and the property is the main residence of the promissory purchaser or close relatives, the owner / vendor’s insolvency will not impact the sale.

Can the promissory purchaser confer a power of attorney to sign the rent to buy contract?

Yes. Legislation provides the right to confer a power of attorney on a third party to sign the rent to buy contract, and the final deed of sale, where applicable, on the promissory purchaser’s behalf.

You should be extremely careful about who you chose for your power of attorney. You are delegating the management of your legal and financial affairs to someone else. Hence, it is extremely important that you entrust these matters to a reliable and competent person, preferably a professional. Appointing anyone who does not have enough experience or who has a vested interest is highly inadvisable.

What taxes are applicable with a rent to buy contract?

Tax depends on whether the owner / vendor of the property is a private individual or a company. Direct tax is chargeable to the owner / vendor and indirect tax is levied on the promissory purchaser.

As a rule of thumb, for the duration of the rent to buy contract, as with any Italain rent contract, tax related to the property ownership is borne by the vendor / owner.

The promissory purchaser pays costs pertaining to the transcription of the contract in the land registry. And, where applicable, the promissory purchaser is liable for any subsequent costs, expenses and tax liabilities and/or costs associated with completion of the property sale.

For tax calculation purposes, each rent to buy contract requires case by case assessment regarding advantages and/or disadvantages. This is another reason to involve an independent professional from the outset when considering a rent to buy scheme in Italy.

Finally …

If you do not find your question relating to the Italian rent to buy scheme here, please contact us and we will be happy to answer it for you.

At De Tullio Law Firm, we specialise in Italian and cross border legal matters. If you are buying any type of property anywhere in Italy and you need advice or you would like to discuss your purchase, please get in touch with us. We are here to help.

For more comprehensive information about the Italian property purchasing process, you might like to read our guide. You may also like to watch our info videos about Italian property law.

Self-Build Projects in Italy

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Dreaming of building your own place in Italy?

In pursuit of their Italian dream home, some people decide on self-build projects in Italy.

If you are thinking of building a house in Italy, we would always advise you to seek independent legal advice before signing any paperwork to do with a land-purchase.

Even, if on paper, it looks as if the land you are contemplating buying has outline planning permission, actually getting a building project off the ground in Italy is extremely complex.

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Italian self-build projects are complex. They need a team

Self-builders will need to navigate a maze of red tape. Zoning and planning laws, environmental restrictions, building permits and regulations – to list but a few.

Self-build projects in Italy really do require the help of a specialist team including an architect, surveyor, lawyer and a notary.

All-too-often, those who go it alone run in to trouble. This jeopardises or ends their self-build dream. Unfortunately, without a team, self-builders often don’t obtain all the relevant permits. This and spiralling costs, may mean that the project never gets off the ground.

Living on site during Italian self-build projects

When self-build projects in Italy do go ahead, living on-site whilst building the property is something many wish to do. Obviously there are advantages such as saving on travel time, being able to keep a close eye on progress and security.

We are often asked by self-builders if they can site a mobile home, RV, or caravan on their land without obtaining planning permission. Essentially this will depend on the designation of the land in question. Self-builders should ascertain this from local authority urban and rural plans (Piano Regolatore). Siting and installation of accommodation on land will also play a role.

Temporary accommodation

The Italian “Building Legislation and Regulation Consolidation Act” (Testo Unico dell’Edilizia) does not permit ground anchor systems for mobile homes, RVs and caravans without a construction permit. In other words, a ground anchoring system on mobile accommodation would legally classify the accommodation as a, “new building”.

However, according to the Decreto Casa, anchor systems are permissible where a temporary installation is within a proper outdoor accommodation setting, such as a camping site.

Anchoring must be temporary. It cannot be seasonal, which would imply a long, possibly permanent stay. The mobile accommodation would therefore contravene the requirements of temporariness. Also, connecting the mobile accommodation to utilities  (power, water, gas etc.) implies the intention of extended or permanent use.

A construction permit with regard to mobile homes, RVs and caravans, is not necessary if the mobile home is on wheels. It must have a roadworthiness  certificate and motor insurance. Installation of accommodation on a mobile support, such as a trailer, unsuitable for road transport is not permitted. The mobile accommodation must fulfil the requirements of temporariness. It must be immediately movable. This means it must be roadworthy so the owner can move it elsewhere. Anchoring is therefore prohibited. The mobile accommodation must also be autonomous in terms of utilities. This means it must have its own water, toilet and electricity.

Permanent accommodation

If the mobile home, RV or caravan is for permanent use, such as residential use during a self-build project, self-builders will require a construction permit.

Under Italian law:

“the siting and installation of accommodation during the building phase of a project does not constitute temporary status. If the accommodation has power, water and gas connections this implies long-term residence. In addition, the same principle applies to anchoring with removable devices to ensure the stability of the mobile home, RV or caravan”.

A construction permit is also necessary even if the structure is not for residential use. For example, if a self- builder uses the mobile home to store building materials or as a site-office during self-build projects. In fact, if there is evidence of regular and long-term use by the owner, the installation will be considered as permanent.

Finally …

Buying any type of property in Italy is a serious investment and often the fulfilment of a dream. Italy real estate, planning and construction laws are complex. We recommend you engage the right team of advisors in place to make your experience successful.

At De Tullio Law Firm, we have over 55 years of expertise managing cross border property law matters throughout Italy.

If you are contemplating a self-build project in Italy and you need any advice, guidance or support, please contact us. We are here to help.

Resident or Domiciled in Italy for tax purposes?

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Are you resident or domiciled in Italy?

In this article, we compare being resident or domiciled in Italy and explore the tax implications.

According to Italian tax law, individual tax residency is pursuant to tests. An individual may find themselves tax resident although they only have relatively minor contacts with Italy. This might be property ownership, frequent visits to the country, or business interests in Italy.

If the Italian tax authorities determine that an individual is tax resident in Italy, the taxpayer is subject to worldwide taxation in Italy.

Tax would therefore be applicable for both income and estate tax purposes. It would include an obligation to report all assets wherever they are in the world. In addition to financial assets and accounts, it requires an individual to report all non-financial assets such as, cars, houses, planes, artworks.

Non-Italian nationals with interests in Italy should pay particular attention to these matters to avoid becoming an unintended Italian tax resident. Because this is a complex topic and, each case is different, we recommend that you seek advice and guidance from your lawyer and accountant.

Applicable tax laws determine whether an individual is resident or domiciled in Italy

Domicile

Domicile is generally determined by an individual’s intention to permanently or indefinitely reside in Italy. Often, an individual will physically have a presence in the country. Domicile is a legal concept. Its rules have been established by way of case law rather than a statutory definition. There are three types of domicile.

Domicile of Origin

This is usually acquired from an individual’s parents.

Elected Domicile

By actually residing in Italy, the individual demonstrates the intention of remaining permanently or indefinitely in Italy. In this way, an individual may acquire an elected domicile – also known as a domicile of choice. Where an individual later gives up elected domicile, domicile of origin is automatically re-acquired.

Domicile of Dependency

This is the domicile a minor holds. When the minor reaches 18 they then acquire elected domicile.

Residence

Domicile takes into account subjective elements of an individual’s intentions. The country where an individual habitually lives determines residence.

The EU test for habitual residence is based on an individual’s interests rather than by a particular duration of residence. In 2014, the European Commission published a practical guide on the Habitual Residence Test.

Fiscal implications

Under Italian tax law, three alternative tests determine an individual’s tax liability in Italy. The tests are registration, residence and domicile. If an individual meets one of the three tests for more than 183 calendar days per annum, this triggers an Italian tax liability.

Registration test

This is a straightforward test. If an individual has registered as a resident with their local municipal office – in the comune where the individual’s residential address is located, they are liable to pay tax in Italy.

Residence test

The residence test comprises two components.

The first component looks at whether physical presence in Italy is regular and continuous, as opposed to sporadic and occasional. If an individual spends time both in Italy and another country, periods of presence outside of Italy are compared with the periods of presence in Italy. This ascertains where presence is prevalent for tax purposes.

The second component of the residence test is more subjective. It is based on an individual’s intention to stay and live in Italy for the foreseeable future. A variety of aspects will determine an individual’s intention to live in Italy on a regular basis. In order to determine intentions, authorities will look at an individual’s conduct, social and personal habits. Authorities will also consider working relationships, family relationships, business and personal activities.

Italian tax liabilities arise if an individual’s physical presence in Italy is prevalent compared to an individual’s presence outside of Italy. For example, a regular and continuous presence in Italy is deemed to exist even if an individual travels abroad on a frequent basis. In other words, if an individual is away from Italy for extended periods of time but then returns as soon as possible. This would denote that an individual maintains Italy as the principal centre of their social and family relations.

Domicile Test

This third test aims to define the place where an individual has their principal centre of interests for business and or social reasons. In this context, ‘interests’ include personal, social, moral, familiar, economic, professional and business interests and relationships.

The domicile test revolves around an individual’s intention to establish and maintain their main centre of relations and interests in Italy.

There are tax implications based on the nature, extent and quality of the connections between an individual and Italy, compared with an individual’s connections with any other country.  As a result, an individual who primarily lives abroad but, maintains their principal centre of interests in Italy satisfies the domicile test.

The domicile test therefore requires careful and comparative evaluation to balance all the facts related to business or personal relationships and connections with Italy.

Case Law regarding the legal concept of domicile

In 2011, the Italian Supreme Court referred to a 1991 decision of the European Court of Justice relating to a non-tax matter. The Italian Supreme Court concluded that, in the case of multiple relations and ties with different countries, where the location of the principal centre of an individual’s interest cannot easily be determined, a prevalent consideration should be given to the relations of a personal nature.

However, more recent decisions suggest that extensive economic interest may outweigh personal connections in establishing an individual’s domicile. Thus, an individual may still be liable to pay tax in Italy.

In a ruling in April 2012, the Italian Supreme Court held that a tennis player living in Monaco qualified for tax residency in Italy. This, despite the family proving that they lived in Monaco. They provided proof through children’s school attendance records, household utility bills, membership of local clubs. The ruling took into consideration the fact that the tennis player maintained significant interests and management positions at several family-owned Italian companies. The individual mainly managed these matters from Italy.

In this case, residence identified the taxpayer’s habitual and regular place of living, while domicile identified the taxpayer’s main center of personal, financial and business interests.

Resident or domiciled. Tax guidance

The Italian tax authorities have issued specific guidance on determining whether individuals are resident or domiciled in Italy. Circular n. 304/E of December 2, 1997. Circular 304 provides instructions for the tax agency’s control and audit activities, which should include the collection and review of the following.

– All information contained in the tax agency data base system.

– Copies of all public documents relating to purchases. This includes real estate, gifts, formation of companies and entities, capital contributions to companies and entities.

– All information on transfers of money from or to foreign countries.

– Information regarding the taxpayer’s family relations in Italy.

– The taxpayer’s economic interests in Italy.

– Information about taxpayer’s intention to remain and live permanently in Italy.

Finally …

De Tullio Law Firm specialises in Italian and international property law. We have over 55 years of helping overseas nationals obtain Italian residence. If you need help or would like to discuss your situation, please get in touch with us.

 

You may like to read How to get a mortgage in Italy

Accepting Or Renouncing Italian Inheritance

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Inheriting an Italian estate

Under Italian inheritance law, beneficiaries not only inherit a share of the deceased’s estate, they are also liable for any debts. If debts exceed the value of assets, heirs may choose to waive their inheritance. In this article, we discuss renouncing or accepting Italian inheritance.

How does accepting an Italian inheritance work?

The beneficiary can accept to be an heir expressly or tacitly. In either case, the beneficiary must accept within 10 years from the opening of the succession process. 

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When the beneficiary declares to accept the status of heir they need a notarial or a private deed. 

When someone acts in such a way that the acceptance can be implied or inferred it is referred to as Tacit acceptance

The acceptance can also be reserved. This way, the successor reserves the right to accept or renounce an Italian inheritance until such times as they are able to ascertain whether debts or liabilities on the assets exceed the value of the property the beneficiary is inheriting. In this way, the heir is able to discharge themselves from paying any outstanding debts by renouncing an inheritance in favour of creditors and legatees.

Usually, an heir renounces an inheritance if the decedent’s debts exceed the value of the assets. The heir must pay the decedent’s debts up to the value of the property they inherit.

Renouncing an Italian inheritance

For the beneficiary to renounce an Italian inheritance they must make a  statement in front of a Notary Public or at the chancery of the court where they opened the succession procedure (“volontaria giurisdizione” section). The Notary Public or the court clerk then record a renouncement.  The beneficiary must renounce within 10 years of the opening of an Italian succession procedure.

Finally …

At De Tullio Law Firm, we have published a Guide to Italian Inheritance, which we hope you will find useful. 

If you are a beneficiary to an Italian inheritance, it is always advisable to consult a competent independent professional. A lawyer can provide information about debts and charges on inherited assets. A lawyer will also provide advice regarding renouncing or accepting Italian inheritance. This way you can make an informed decision about how to proceed. 

Each case is different so, if you would like to contact us for a free consultation about your Italian inheritance matter, please get in touch.

Parental Rights in Italy – Italian Family Law

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In Italy, children have the right to a personal relationship with both parents

It is important to understand parental rights in Italy for those living or moving to the country. That way, if you have children, you can be in the best position to make decisions for the future.

All EU countries recognise that children have the right to a personal relationship and direct contact with both parents. This also applies if the parents live in different countries.

What about parental rights in Italy in the event of divorce or separation?

It is important to determine whether the children will live exclusively with one parent or alternate between parents.

If both parents live in Italy but are unable to reach an agreement, you may have to take the matter to court. A judge will then decide on living arrangements and parental rights. The court’s decision will consider the child’s best interests and determine your custody rights. It will also decide where the child resides.

In situations involving more than one country where, for example the parents live in different countries, the courts responsible for handling cases of parental rights are those in the country where the child is habitually resident. You can agree with your spouse that the court ruling on your divorce should also rule on parental rights.

Where the child has more than one nationality, the law of the country with which the child has the closest connection applies. Under section 19 of of Act No 1995/218, if the child has more than one nationality and one of these nationalities is Italian, the Italian nationality takes precedence. It is the nationality of the child at the point the case goes to court that decides this.

Parental rights in Italy: 3 types of child custody

1. Exclusive custody – one parent has sole custody and makes all day-to-day parenting decisions. The other parent has limited responsibilities.

2. Joint custody – gives both parents equal parental responsibilities and custody. However, in the interests of the child or children, they are likely to live predominately with one parent. In theory, this approach is the best for a child as they have access to both parents.

3. Alternating custody – means both parents can exercise their parental responsibilities within predetermined custodial time periods given. (This form of custody is rare).

Cases where the judge grants exclusive custody to one of the parents have become rare in Italy. Sole custody would require proof that it would be in the best interests of the child.  However, even in cases of sole custody, both parents will need to consult on major decisions relating to the child. Moreover, in cases where joint custody is applicable to disputing parents, visiting arrangements and a timetable will be established. Similar to exclusive custody cases, these arrangements give the parent that does not reside with the child or children limited access rights.

Marriage and registered civil partnerships

in order to determine parental rights in Italy, married or registered couples, will have been legally separated for six months and must have filed for divorce. They will need to go to court regarding both their divorce settlement and arrangements for their child or children. Following divorce, the child will live according to care arrangements determined by the court.

Unmarried couples and partners

In the case of unmarried couples, or estranged married couples, there is no requirement to go to court. Parents can simply agree between themselves on parental responsibilities and living arrangements. However, we strongly recommend seeking legal advice to formalise and record arrangements. Within the EU, a married father has the same rights as the mother. Where a couple cannot agree arrangements between themselves, the court in the child’s country of habitual residence determines parental rights and responsibilities.

In theory, both parents have equal parental rights and responsibilities for their child or children. In practice, however, where there is no legitimate reason otherwise, the mother’s home is more likely to be the main residence of the child.

Same-sex couples

On the subject of same-sex couples, a 2013 Italian Supreme Court decision (601) granted sole custody of a child from an earlier marriage to a mother living with another woman. The court declared that, “there is no scientific certainty proving that a minor cannot grow up in a balanced way within a same sex couple”. 

Parental rights in Italy in adoption cases

The Italian law has always stipulated that a couple must be married in order to adopt a child. Italian law 184/1983 governs adoption and foster care. The law, in principle, only permits married couples, who must be of the opposite sex, to adopt. According to the law, there are no restrictions on foster care. In a limited number of situations, the law provides for adoption in certain cases by a single person. In addition, some courts have interpreted this to include the possibility of unmarried couples adopting a stepchild.

From an inheritance point of view, no distinction is made between legitimate, natural and adopted children – all have equal rights.

Finally …

If you would like to discuss your personal situation, you can reach us here for a free consultation.

 

You may also be interested in Italian divorce law and EU regulations.

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Buying Italian Property at Auction

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In some parts of the world, buying property at auction is routine

Buying Italian property at auction, however, is not quite so straightforward.

There are two types of auction in Italy. Vendita con incanto and vendita senza incanto. In both types of auctions, the  actioneer sets the minimum sale before the auction.

Vendita con incanto 

These auctions happen publicly and openly. The highest bidder buys the property on the condition that the bid is at or higher than the reserve price.

Vendita senza incanto

Prior to a vendita senza incanto auction, participants must submit their bids by a certain date – in sealed envelopes. Sealed bids cannot be under the reserve price for a property.

In Italy a voluntary property sale by auction is highly unusual

Unlike in the UK or USA, where voluntarily selling property by auction can be an attractive way to fetch a good sale price, in Italy a voluntary sale by auction is rare.

Generally in Italy, people sell property at auction for two reasons. Firstly, the owner declares bankruptcy and has to sell off the property to pay creditors. This type of auction is an asta fallimentare.

The second reason for an auction in Italy happens through a court order. This is an asta giudiziaria. The property is seized or sequestered by the Italian State. This happens because the owner is part of a criminal prosecution or because the State has decided to raise funds to pay off the owner’s outstanding taxes, debts and/or mortgage payments, or it could even be that the courts order the auction to resolve an inheritance dispute.

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Buying Italian property at auction requires a cautious approach

If you are considering buying an Italian property at auction, you need to take even greater care than buying property through conventional channels such as through a real estate agency or from a private vendor. 

While the owner of a seized property cannot participate in an auction, someone the owner knows can. It is not unheard of for a relative, friend or associate of the previous owner to participate in an auction.

Participation in an Italian property auction involves registering to participate, which means amongst other things that you must have an Italian tax code, codice fiscale, and you need to obtain a receipt proving that you have paid a 10% deposit on the estimated value, or starting bid price of the property that interests you. You can also elect a third party to bid for the property on your behalf. This requires giving your nominated party a limited power of attorney, procura speciale.

Top 10 tips for buying Italian property at auction


1. Bargain?

Don’t take it for granted that you are getting a bargain at an Italian property auction. Even if you purchase a property at a much lower price than its market value, it may not necessarily turn out to be a good deal. You may be better off buying a property another way.

2. Timing

Assess the timing. Consider how urgently you want to move into the property. The amount of time required to actually obtain a property at auction is not always predictable.

3. Paperwork

Read all the available documentation very, very carefully. Then read it all again. It is critically important to conduct in-depth due diligence. Study and investigate the notice of sale, the survey report, estimates, plans and maps, photographs and all the documents published on the relevant web site at least 45 days before the auction. Individual courts advertise Italian properties for sale by asta giudiziaria on their websites. www.astagiudiziaria.com is a portal providing access to judicial auction sales across Italy.

4. Due diligence

You should engage your own lawyer to put together a legal package. Make sure you understand the implications of the property’s legal status. The onus is on the bidder to obtain legal paperwork. It should specify, amongst other things, titles, covenants, liens, debts and charges attached to the property. All these legalities will become the responsibility of the purchaser.

5. View before you bid

As part of your due diligence, visiting the property is absolutely vital. View the property before the auction with a court appointed official. You should take your own professional team with you – a lawyer, a surveyor, a builder. There are likely to be issues not in the aforementioned sales and legal packs – aspects such as, environmental, zoning and planning permissions. And, do ask about anything that concerns you. If your bid is successful, you will be held legally responsible for everything.

Also, bear in mind that quite a lot of time may have elapsed between the property documentation being prepared and your visit so, the property when you visit, may have deteriorated and conditions could be worse or zoning laws might have changed. This means that the situation described in the property packs may no longer be relevant.

6. Budget

Set yourself an auction budget and stick to it. Prior to the property auction, decide the absolute upper limit of the sum you are willing to spend on the purchase. Participating in an auction requires calm rationality. Prior to tackling your auction purchase, perhaps attend a couple of other Italian auctions to understand how they work.

7. Associated costs

Always ascertain auction and additional costs before participating. Find out exactly how much you should budget on top of the property purchase price. Costs might include, registration tax or VAT charges pending, any professional fees for the title transfer.

8. Payment

Payment methods require attention. How are you planning to pay? You will have already paid a 10% deposit to participate in the property auction. You will need to be able to access the remaining funds quickly if your bid is successful, generally between 10 – 60 days of purchase.

If you need a mortgage, you will need to have a promissory note from your provider in place in advance of the auction. 

9. Tax

Take tax in to account. There may be tax benefits available to you on the purchase of a property at auction. Normally,  property transfer tax is due on top of the property purchase price. However, the rule on “price-value” does not apply to property purchased through court enforced procedures and bankruptcy. If you want to take advantage of any available tax benefits, you must express this ahead of the property auction. You must be ready to put everything in place by the end of the auction if your bid is successful.

10. After the auction

A purchase transfer signed by a judge is enforceable and allows the immediate release of the property. However, it is not unusual in Italy for the previous owner to appeal in court to have the auction annulled. In other cases, a property may be subject to adverse possession (usucapione), or a sitting tenant. As the new owner, you will have to take eviction action – at your expense.

Finally …

We have set out a few facts and tips regarding Italian property auctions. However, as this is a vast and complex subject, it really just skims the surface. There are many potential pitfalls and legal ramifications to consider when buying Italian property at auction. We would always recommend that you seek independent professional advice before participating in an Italian property auction. 

Buying Italian property at auction can be done safely but, it is definitely not for the faint-hearted. if you would like to discuss your situation, please get in touch.

At De Tullio Law Firm, we have over 55 years of experience managing all types of Italian property transactions. We have in-depth expertise of Italian and international legal systems and processes. We understand the way things work in Italy, which is often different to the way things work elsewhere. 

 

Testamentary Succession in Italy: Italian Inheritance Law

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Close family members take precedence in Italian inheritance

Testamentary succession is determined in accordance with the provisions of a lawful will and the applicable rules of law

In Italy, the disposal of an estate occurs in compliance with the decisions of the testator as set out in an Italian will. Or, where the deceased was intestate, i.e the deceased did not have a will, in accordance with Italian inheritance law.

Italian inheritance law dates back to the Roman Law tradition. Because of this, testamentary succession in Italy follows the principle that a decedent’s close family members merit special protection. This therefore partially limits the right of the testator to dispose of assets entirely as s/he wishes.

Get Your FREE Guide to Planning Your Inheritance in Italy

Our PDF guide explains the ins and outs of preparing your inheritance under Italian law

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Testamentary succession and foreign wills

Following the death of a testator with an Italian will, the competent authorities register and publish the will. However, in the case of foreign wills, Italian law states that an Italian Public Notary must authenticate the will before probate can begin.

Managing testamentary succession documents drafted in a foreign language and subject to a foreign jurisdiction in Italy can present difficulties. In fact, a notary cannot publish or legalise a will drafted in a foreign language. The notary will therefore require an Italian translation. You will need to engage a court-sworn translator to translate the will. Costs for this may be substantially higher than drafting an Italian will in the first place.

Drafting a will in Italian minimises the risk of conflicts among heirs following the death of the testator. It also ensures that the Italian authorities have a clear and direct understanding of the legal framework.

The exclusion of certain heirs from testamentary succession in Italy

As mentioned above, one of the principles of Italian legal succession is the protection of the family. Whether you die with or without a will, you cannot exclude some heirs from the succession.

Italian law calls these forced heirs. They must receive a part of the deceased’s assets. This is known as the reserved quota. Italian Civil Code also determines what quota of assets a testator can freely dispose of, without limitation. This is known as the available quota. 

Forced heirs, reserved and available quotas in Italy

The table below  shows the reserved quota for forced heirs and the available quota dependent on relationship to the deceased:

Forced heirs Reserved 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.  


Applicable laws

It is also worth mentioning that non-Italian nationals may be subject to the testamentary succession laws of their own country. If the deceased was resident in Italy at the time of death, Italian Inheritance law applies to the deceased’s worldwide assets. Whereas if the deceased lived outside Italy, Italian inheritance law is only applicable to assets in Italy.

For foreign nationals resident in Italy, the introduction of EU Succession Regulations, known as Brussels IV, may also impact how you manage your testamentary succession. 

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.  

You may also be interested in Legitimate Heirs. Rights of “Forced Heirs” in Italian Inheritance