Tag Archive for: Italian Lawyer

Italian Income Tax – New Measures from 2020

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Italian Income Tax Relief

In order to foster economic growth, as part of the Italian budget law, art. 5 of, “Decreto Crescita” came into effect in December 2019. Legislation provides for significant changes to the Italian income tax system for anyone who transfers their tax residence to Italy from 2020.

The law is retrospectively applicable to anyone who transferred their tax residence to Italy from 30th April 2019.

Who can benefit from Italian income tax measures introduced in the 2020 budget law?

Legislation on income tax now extends to foreign football players and other professional sportsmen and women. The law establishes a 50% reduction on income tax. It applies for 5 years provided the sports professional maintains their tax residence in Italy for at least two years. For those not from the sports arena, tax relief of 70% is also available. If for example you generate an income in Italy through employment, self-employment or from business start-up activities.

Income tax relief of up to 90% is available for those who transfer their residence to one of the following regions: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardinia, Sicily.

In order to take advantage of tax benefits, certain conditions apply. You can transfer your tax residence so long as you were not resident in Italy for the previous 2 tax years. You must undertake to reside in Italy for at least 2 years and, your work-related activity should mainly be in Italy.

There is no requirement for Italian citizens returning to Italy as tax residents from 1st January 2020 to have previously been registered with AIRE (the Registry Office for Italian Citizens Residing Abroad).

Tax relief is applicable for 5 tax years. However, a 50% income tax reduction is available on income you generate in Italy for a further five tax years if you have at least one minor or dependent child. This also applies if the child is in pre-adoptive foster care.

In addition, you must become the owner of at least one residential property in Italy. Your property purchase can take place either following your transfer to Italy or in the twelve months preceding your transfer. You can purchase property in your name, a spouse or partner’s name, in your children’s name or in co-ownership.

High net worth individual Italian income tax system

The 2017 Stability Law remains in force regarding foreign income from real estate investments, dividends, capital gains and other income.

This high net worth individual tax regime  is available if you have not been a tax resident in Italy for the nine (out of ten) years prior to transferring to Italy. The advantage consists in paying a substitute tax of € 100,000 on all income derived from abroad. Sports professionals (football players, basketball players, etc.) can benefit from this tax system.

Flat Tax

The Stability Law of 2019 includes a flat tax regime. This regime is aimed at individuals with a pension or another source of income from outside Italy. You can transfer residence to certain municipalities in the south of Italy and, provided you were not resident in Italy in the five previous tax years, you can opt to pay a flat-rate tax of 7% on your income from abroad.

Building-related taxes

Deductions for energy re-qualification (65%), building renovation (50%) and furniture and household appliance bonuses (50%) concerning the purchase of new furniture for renovated buildings are available.

A new “Facade Bonus” allows for 90% deductions on documented expenses relating to refurbishing or restoring external facades of buildings. As any work to facades must comply with technical regulations, work needs prior assessment and permission.

Capital Gains

The budget law also introduces changes to real estate capital gains. A substitute tax is available if a principal residence or a second home sale meets certain conditions. The substitute tax starts at a rate of 20% on sales of properties that took place until 31 December 2019. It rises to 26% for property sales from 1 January 2020. The application of this regime is optional and should be requested by the notary on the date set for the completion of the sale.

Company shares

The budget law offers terms for recalculating the value of investments in unlisted companies up to January 1, 2020. The drafting and certification of the appraisal, as well as the payment of the substitute tax is due by 30 June 2020.

These terms only apply to private individuals with equity investments unrelated to business operations. In particular, the aforementioned legislation allows the revaluation of equity investments held in companies not listed on regulated markets. Individuals must hold investments at 1 January 2020 and require a sworn appraisal report by 30 June 2020 when the substitute tax of 11% is payable.

Company assets

The budget law allows the revaluation of company-owned assets. Based on 2019 financial statements, the law introduces reduced substitute tax rates:

– from 16 to 12 per cent for depreciable assets;

– from 12 to 10 percent for non-depreciable assets.

In addition, a new provision allows companies to release credit balances recorded in their accounts against the recognition of higher values ​​at a rate equal to 10%.

This option does not concern IRPEF entities with simplified accounts.

New IMU

The budget law introduces a new version of IMU. It sees the merger of former property tax IMU (Imposta Municipale Propria) and the municipal service tax  TASI (Tributo Servizi Indivisibili) to create a new IMU (Imposta Municipale Unica) tax.

Finally …

With over 55 years experience of cross border and Italian property transactions, we understand that Italian property-related tax matters can be confusing. If you would therefore like further clarifications or want to discuss your situation, please contact us for a free consultation. We are here to help. 

 

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

Real Estate in Italy: Reservation Offer

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Real estate contract law in Italy

If you are considering buying real estate in Italy, Italian civil code in art. 1470 governs sales and purchase contracts for Italian real estate.

A contract is a consensual transactional instrument through which one party (the vendor) transfers the ownership, or a right, to an assets to another party (the buyer).

Contractually therefore, a buyer is under obligation to pay the agreed fee to the vendor for an asset or right.

Acceptance of a reservation offer for real estate in Italy

If you are not familiar with the legal and financial implications of the three-step property purchase process in Italy, you may wish to read our guide to buying property in Italy.

The first step to purchasing a property in Italy is a reservation offer. 

In effect, when buyers find an Italian property they like, they make a written offer on the property. Amongst other things, the reservation offer identifies the property in question and makes a price offer.

For the offer to be valid, first a vendor must accept the reservation offer in writing. This acceptance must then reach the potential buyer within a time frame stipulated in the reservation offer.

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Contractual obligations of a reservation offer

Until written acceptance of a reservation offer reaches potential buyers, no contractual obligation exists between the parties. In other words, the reservation offer is revocable.

However, buyers may stipulate they wish to keep their reservation offer firm for a specified amount of time. If a vendor accepts the time frame, it means the vendor has an obligation to remove the property from the market. Because the vendor will not be able to market the property for the duration, the offer is known as, an irrevocable reservation offer.

Italian real estate agents: roles and fees

As in other countries, vendors in Italy often put their property in the hands of a real estate agency. The role of Italian real estate agents is to market the property to potential buyers. When a potential buyer makes an offer for a property, the real estate agent passes the offer on to the vendor. The estate agent does this through a reservation offer.

At this point, vendor and buyer are usually looking to move towards the second stage of the Italian purchasing process. This is where both parties sign a preliminary contract. If the vendor does not progress the sale to a preliminary contract stage, the reservation offer lapses and neither party has any obligation towards each other.

At the reservation offer stage, another aspect to consider is the estate agency commission. It is always worth asking if a real estate agent’s fees are negotiable. Generally however, commission ranges from 3% to 8% of the property sale price. Some agencies work on a fixed fee. To put that another way, fees are based on a percentage of the total sale price.

A reservation offer may not end in a sale

Between the reservation offer and signing a preliminary contract, buyers should carry out property checks and searches (due diligence). This may highlight problems or irregularities related to the property. These issues may subsequently lead to buyers withdrawing their offer.

The acceptance of a reservation offer between the seller and buyer is not therefore a guarantee it will end in a sale.

You should therefore be wary if the estate agency requests their commission at this stage.

At what stage should you pay Italian estate agency commission?

To clarify when exactly estate agents should receive their commission, a 2010 Supreme Court case is pertinent. In order for a real estate agent to be entitled to their fee, it is not sufficient that a broker merely puts vendors and buyers in contact. It is not enough to hope that the transaction concludes successfully.

In other words, commission is only payable to a real estate agent once a preliminary contract is in place between the vendor and buyer.

Difficulties linked to successful completion of a real estate transaction arise because there are so many pitfalls between the reservation offer and preliminary contract.

Contractual risks of real estate in Italy

To avoid risks, it is wise to seek independent legal advice before you sign any paperwork relating to buying property in Italy. To avoid any conflicts of interest, make sure you choose your own lawyer rather than a lawyer recommended by an estate agent or a vendor.

Your lawyer will guide you step by step through the intricacies of the Italian property purchase process.

Finally …

De Tullio Law Firm is an Italian Inheritance and Real Estate Law Firm present throughout Italy. We specialise in cross-border residential and commercial property transactions and inheritance matters in Italy. Should you need any further clarification concerning this or other property-related topics, De Tullio Law Firm will be happy to help. Get in touch with us at: info@detulliolawfirm.com.

You may also be interested in Insider Tips for Buying A Property in Italy. You may also like to watch our info videos.

Renovating a house in Italy: Safety Requirements

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Renovating a house in Italy. Health and safety law

Who is liable for compliance with safety requirements when renovating a house in Italy?

In the case of even minor construction work the, “works manager” is responsible for safety. This is usually an architect, engineer or designer. However, if the owner of a property directly procures the services of a worker, the homeowner is acting as the works manager.

This means that the homeowner is responsible for safety. Likewise if there is an accident, the homeowner is liable to criminal and civil consequences.

Imagine you hire a plasterer to render a wall and the plasterer falls off a ladder. Or, you find an electrician to rewire your property and the electrician gets electrocuted.

You, as the homeowner, are liable. Even if you are not around at the time of the accident. As the legal owner of the property, in the eyes of the law, you are the employer of the injured worker.

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The risk of criminal and civil prosecution

Your liability for the accident is not only of a criminal nature, for culpable injuries caused to the worker, but also of a civil nature.

In other words, you may be liable to pay compensation. Compensation for a broken limb can amount to several thousand euros. In a worst-case scenario, compensation may be enough to see your property seized.

This is a very intricate legal issue based on technicalities regulated by Italian law. If you are planning refurbishment work on your property in Italy, make sure you meet  safety requirements.

Homeowner liabilities

When renovating a house in Italy, you are legally responsible for ensuring safety requirements.

Italian law takes the view that anyone regarded as, “non-professional”, such as a homeowner, who procures the services of a third party to carry out any type of home improvement, is responsible for ensuring that workers operate in accordance with health and safety legislation.

Safety requirements. A case study

Recently, the Supreme Court examined an appeal filed by a homeowner plaintiff who had commissioned a construction company to paint the exterior walls of a cottage. During the work, a painter fell through a hole in the paving. The painter fell several metres into the basement and tragically later died. The hole that caused the accident had previously been covered with boards. However, the boards had been removed by another worker and replaced with polystyrene, which was not strong enough to bear the weight of the painter.

The court of appeal upheld previous rulings which established that the homeowner had a duty of care in relation to the execution of the contract. In this case, the court identified several failures. In the first instance, the absence of a risk assessment plan. Secondly, a lack of maintenance on walkway around the cottage and risks posed by the opening into the basement. Thirdly the court considered that there had been a failure to supervise and inform workers at the property.

Safety requirements are an employer’s responsibility when renovating a house in Italy

The court found the homeowner at fault for these failures. Safety obligations are the exclusive competence of an employer, who in this case was the homeowner. In effect, the homeowner was acting as the painter’s employer. While the work was of a “domestic” nature, the court found that the homeowner was not exempt from performing the duties of works manager. In other words the accident occurred because of the homeowner’s failure to take responsibility for his employee’s safety. And the homeowner’s negligence to act in the role as designated works manager.

In cases such as this, it is, therefore, crucial to underline the homeowner’s obligation to point out any dangers on site and wherever possible, to provide for their elimination before work starts. Unless a homeowner can prove they exercised a duty of care and took all measures to provide a safe working environment, they will be held liable.

Health and safety requirements in Italian building contracts

When a homeowner engages a contractor, it is important to have a written contract. This should indicate that compliance with safety regulations is the contractor’s responsibility. This way it becomes clear, from a legal point of view, that the contractor is responsible for safety on home renovations in Italy.

Finally …

Whether you are building a new property in Italy, or renovating an existing Italian property, having the right building contract is vital to ensure that everyone involved knows their rights and responsibilities.

De Tullio Law Firm is a legal firm present throughout Italy. We have over 55 years of specialist experience dealing with issues related to property, construction and renovation matters. If you are thinking of undertaking building or refurbishment on your property in Italy, or if you are in a difficult situation concerning liabilities and safety requirements through refurbishment work, we are here to help. Get in touch with us at: info@detulliolawfirm.com

 

You may also be interested in Off-plan property in Italy – Where do you stand legally?

You may also like our info videos on the subjects of Italian property, succession and family law.

Title deed in Italy. Change of Names.

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Registering names on a title deed in Italy

The final step of the Italian conveyancing process is signing of the deed of sale. In effect, the title deed in Italy transfers ownership of real estate into someone’s name.

This legal procedure demands the presence of a notary public, the real estate vendor(s) and buyer(s) and two witnesses.

The notary reads aloud the entire deed, which is written in Italian. All parties, including the witnesses and the notary public, then approve and sign the title deed.

If one of the parties to the transaction is not fluent in the Italian language, Italian law requires the presence of a qualified professional to translate and interpret the title deed. This could be a translator or a bilingual property lawyer. This legal requirement aims to ensure that all parties fully understand the content and ramifications of the deed. The professional acting as translator must also sign the title deed.

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Once the notary has signed-off on the deed, the buyer acquires ownership of the real estate.

Subsequently, the notary is responsible for certain formalities. Because notaries work for the Italian State, registering the deed with the tax authorities is the first step. Next the notary lodges the deed in the Public Registers. This allows any third parties who may have an interest to know about the change of ownership. Lastly, the notary informs the land registry so they can update their records accordingly.

How do you change the name on an Italian property / title deed?

There are many reasons why you may need to change the name on a title deed in Italy. Divorce and death are the most common reasons.

In order to change the name on a title deed, you will require a new notarial deed.

For example, if you acquired a property with a spouse and following a divorce you need to remove one of the names from a real property title deed, you will need a new notarial deed.

Where the divorce decree is from an Italian Court, the transfer of ownership will not involve payment of any real estate transfer tax.

If on the other hand, the divorce decree is issued by a non-Italian Court, you will have to pay real estate transfer tax.

The terms of the new title deed determine applicable tax rates. It will depend whether the real property changed hands without any payment or if there was a financial transaction involved. In the latter case, you will need a new deed of sale.

How do you find out whose name is on a title deed in Italy?

In order to find out whose name appears on a title deed, you will need to conduct mortgage and cadastral searches.

Finally …

For more information and clarification or, if you need to change a name on a title deed or ascertain whose name is on a real property title deed, feel free to get in touch with us. We are here to help.

You may also like to read: Translating legal documents in Property Transactions

Homes for 1 Euro in Sambuca, Sicily (Italy)

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Is it true that there are homes for 1 Euro in Sambuca?

To combat dwindling populations and to attract Italian and foreign investors to revitalise their areas, a number of Italian villages, towns and cities, have launched charm offensives by putting a number of houses up for sale for the symbolic sum of 1 Euro. Dream homes for €1 in Sambuca is the latest 1 Euro property scheme in Italy. This is how the Sicilian Municipality of Sambuca is promoting tourism and highlighting depopulation issues. Sambuca is in the Province of Agrigento.

News of €1 property sales in Sambuca spread further through a CNN article on 18th January 2019.  Local officials say, “It’s not the first Italian town to lure in outsiders with tempting offers but, Sambuca is scrapping red tape to make sure any interested investors can more or less make their purchase right away”.

As opposed to other towns that are merely doing this for propaganda, this city hall owns all the homes for 1 Euro in Sambuca on sale,” says Giuseppe Cacioppo, Sambuca’s deputy mayor and tourist councillor. “We’re not intermediaries who liaise between old and new owners. You want that house, you’ll get it in no time.”

Are there any conditions attached to the purchase of homes for 1 Euro in Sambuca?

New owners must commit to refurbishing their choice of the crumbling 40 – 150 square meter dwellings within three years. Renovation costs start at €15,000 (about $17,200). Owners will also need to cough up a €5,000 security deposit that will be returned once the remodelling is complete.

With the population dwindling, Cacioppo says the town needs outsiders to prevent it from falling into ruin. “We can’t afford to lose our lovely Arab heritage. Luckily, foreigners are lending a hand in this rescue crusade.” (Source: CNN).

1 Euro houses at auction

As with all 1 Euro house schemes around Italy, sales take place in public auction (vendita con incanto).

It’s impossible to tell what you are taking on just from looking at a few photos of a property.

In some countries house auctions are common. In Italy however, they are not. There are no legal packs, which contain essential information including official titles and searches, property information and planning permission. In effect, you are responsible for conducting property-related searches.

To avoid buying what seems like a bargain but, subsequently turns out to be a money pit, you should inspect the property before deciding to make a bid.

Finally …

While €1 properties may seem like a great opportunity, buyer beware! Conditions always apply.

There are plenty of other reasonably-priced houses in Italy without the terms and conditions attached to €1 property schemes. These properties may be a better option for you because you can undertake renovation at your own pace and on your own terms.

Before making any type of property investment in Italy, you should seek independent legal advice on matters such as ownership titles, zoning, planning, structure and conditions of sale and purchase.

If you are considering buying a property anywhere in Italy for 1 Euro, or more, please free to contact us via email or fill in our contact form.

 

You may also be interested in How to get a mortgage in Italy

Buying a House in Italy Can Be A Nightmare

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When buying a house in Italy, before you sign any paperwork, seek professional advice

Buying a house in Italy is a serious investment and often the fulfilment of a dream. Italy’s unique real estate laws and local customs all lead to the recommendation of having the right team of advisors in place to make your experience successful.

A couple from Bristol found a house in the Abruzzo that they wanted to buy. The vendor’s real estate agent got them to sign a Proposta di Acquisto (reservation offer).

The estate agent passed the reservation offer to the vendor. The offer basically stipulated the price the couple was willing to pay for the property. It included the couple’s cheque for a €5000 deposit, made payable to the vendor. The vendor accepted the couple’s offer, took the cheque, and the deal became irrevocable. The estate agency also asked the couple for their brokerage fee of 3% of the purchase price, which they immediately paid.

Get Your FREE Guide to Buying Property in Italy

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The couple then discovered that the charming outbuilding with self-contained accommodation had no planning permission. Getting the building regularised would entail fees for a geometra (surveyor) and tax to the local municipality. The outbuilding would be subject to a demolition order if the permit was not granted. The couple even faced the risk of prosecution for illegal construction. The vendor had no intention of remedying the situation and there was no recourse for the couple. The couple was stuck in a nightmare scenario and yet, the whole thing was easily avoidable.

Teamwork makes the dream work

As a foreigner buying a property in Italy, before you sign any paperwork which may be legally binding, make sure you have the right team of advisors working for you.

Choose your own geometra to assess the integrity of a building’s structure. Check whether planning permission exists and, if necessary, what the costs would be for putting things right. You may also want to ask a geometra about the geology of the location. How prevalent are natural hazards such as landslides or earthquakes?

Engage your own lawyer. Your independent legal advisor will examine titles, zoning matters and review all paperwork associated with buying a property. A lawyer can save you money by helping you negotiate the deal and will ensure your rights are protected.

Italian law requires that all property and land transactions complete through a notary. Notaries work for the Italian State to ensure that transactions happen in accordance with Italian law. They ensure that purchasers pay all the relevant fees and taxes and register the deed of sale. Choose your own notary.

Independence is key when buying property in Italy

We cannot emphasise enough the importance of seeking independent advice. Choose your own professionals. While the estate agent or vendor may recommend professionals with whom they cooperate, you should bear in mind that estate agents and vendors have a vested interest in selling the property to you.

Finally …

At De Tullio Law Firm, in addition to full conveyancing services, we offer a property background check. This is a  pre-purchase service, which identifies and prevents problems such as the ones encountered by the couple from Bristol.

Likewise,  for those looking to sell their Italian property, we can help you prepare a pre-sales package that includes all the paperwork potential buyers will be looking to gather prior to making a purchase decision.

For more comprehensive information about the Italian property purchasing process, you might like to read our guide. If you would like to discuss your situation or, if we can be of assistance, please get in touch.

 

You may also be interested in Insider Tips for Buying A Property in Italy

Italian Estate Tax

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Italian estate tax (imposta di successione)

Although 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.

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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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. For immovable assets the law of the country where they are located is applicable. Examples of immovable assets include houses, shops, buildings, agricultural or building land.

How does Italian estate tax work?

In terms of payments, Italian estate tax appears less onerous 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, civil partner 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%

–

Furthermore, 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.

Are there any exclusions 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 mitigate 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. It would be prudent to seek advice before taking action. A testator needs to take in to account certain matters. These include foreign matrimonial regimes, usufruct, tax consequences, joint ownership structures and other foreign proprietary rights with respect to an estate.

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

 

 

Italian Inheritance Services

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Your specialists for Italian inheritance services 

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

Roman law

Because 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.

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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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.

 

Holding Accounts in Italy. Property Completion funds

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Keep your property completion money safe

On 29th August 2017, Italian legislation saw the introduction of holding accounts. The legislation governing payment for the purchase of Italian residential and commercial real estate is part of the Italian Law of Competition.

The law aims to provide better protection to both property buyers and sellers.

Holding accounts are applicable to funds for the completion of the purchase of Italian property. Deposits connected with a reservation offer and preliminary contracts are not subject to this legislation.

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The buyer and/ vendor must request their chosen notary to use a holding account. In other words the notary doesn’t automatically use holding accounts.

In addition, the buyer can request the notary to keep funds in a bonded account. Again, the onus is on the buyer to specifically request that the notary use bonded holding accounts. As this may generate problems with the seller, we would recommend that the preliminary contract include a clause that all parties authorise the notary to hold completion funds in bonded holding accounts.

How do holding accounts work?

The buyer acquires legal ownership of the property at the signing of the deed of sale. However, by using a holding account, the notary will delay payment until after registration of the deed.

Following signature by all parties to the transaction, the notary has 30 days to register the deed of sale with the relevant land registry authorities.

Once registration of the deed takes place, the buyer can be certain that the purchase has been completed smoothly. Tranfer of funds to the vendor can then take place.

Keeping funds in holding accounts therefore provides protection to the buyer between signing the deed of sale and its registration.

Between signing and registering the deed, adverse entries pertaining to the property can come to light. Issues might include outstanding debts, mortgages, encumbrances, court applications for seizures and foreclosures.

The Law of Competition states that when purchasing property, all outstanding payments by the buyer to the seller should be kept in dedicated holding accounts belonging to a notary. This sum also includes any amounts the vendor may require to settle liabilities. For instance, the vendor may still be paying off a mortgage on the property. In this case, the buyer would pay the entire balance of payment for the property into the notary’s holding account. However, a part of this will serve to redeem and cancel the vendor’s mortgage lender once the purchase is complete.

Do all notaries have holding accounts?

The Law of Competition stipulates that a notary must have a holding account in which the notary can receive funds from clients for the delayed payment of real estate property.

A notary has no entitlement to any interest accruing to these holding accounts. Nor can a notary use funds for any other purpose than the payment of a particular property.

Furthermore, if a notary has debts, creditors can not foreclose on money deposited in holding accounts. Should the notary die, any funds in holding accounts do not constitute part of the notary’s estate. And in the event of death, funds do not form part of the notary’s matrimonial property regime.

Finally …

If you are looking for further information about the Italian property purchasing process, you might find our comprehensive guide helpful, or if you need independent legal advice,  please get in touch for a free consultation.

 

You may also find Buying Property in Italy useful.

Reserved Acceptance – Italian Inheritance

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Debts on an Italian inheritance

Accepting an Italian inheritance also implies taking on responsibility for any debts the decedent leaves. Heirs risk having to paying any debts they inherit from their own pockets. For this reason, Italian law confers a choice of whether to renounce or accept an inheritance. There is however, also a third way to mitigate risks: reserved acceptance. To illustrate the concept of reserved acceptance, below we provide a brief case study on this matter.

Silvia and Eric Jones owned a property in Liguria and were resident in Italy for many years. Sadly, in close succession, Silvia and Eric died.

The Jones’ sons, Larry and Tom, got in touch with De Tullio Law Firm about their parents’ Italian Wills. They had concerns regarding what happens when heirs are unsure exactly what they are inheriting. Larry and Tom believed that their parents had a lot of debts. They worry they will have to pay these debts if they accept the inheritance.

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Because heirs have the possibility to accept an inheritance using reserved acceptance – “beneficio d’inventario”, it means that Larry and Tom will only be liable to pay their parents’ debts on any sum they inherit.

What is reserved acceptance?

If you are an heir, but you are unsure whether the inheritance contains more liabilities than assets, you can use, “beneficio d’inventario” (reserved acceptance). This avoids any merger between your estate and the decedent’s. Thus you will not be liable to pay off the decedent’s debts with your own money.

If, for example, you inherit €10,000, compared to a debt of €20,000, you will only be liable to pay the debt on the sum you have inherited, namely the €10,000.

Reserved acceptance is however not a good idea if an heir is certain that liabilities outweigh inherited assets (unless the heir wishes to pay debts in order to honour the decedent’s memory). Where certainty of debt exists, renouncing the inheritance is a more appropriate solution.

It is worth mentioning that certain people have to accept an inheritance through “beneficio d’inventario”. These people include minors under the age of eighteen, people in care and legal entities, including the State, associations and foundations.

How does reserved acceptance work?

You need a notarial deed for reserved acceptance. Alternatively, you can make a declaration to a clerk of the court in the district where the decdent had their last domicile.

Finally …

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.

If you are unsure about any aspect of an Italian inheritance, please contact us. We will be happy to provide you with more detailed information.