Zes-Aas – 10 years tax-free for pensioners in Italy

Zes-Aas – 10 years tax-free for pensioners in Italy

Italian government plans 10 years tax-free for pensioners relocating to Sicily, Sardinia or Calabria

10 years tax-free for pensionersYou may have heard that the Italian government is preparing to discuss a proposal to repopulate southern Italy and revitalise its economy? The proposal comes from Alberto Brambilla, pension expert and adviser to Deputy Prime Minister Salvini.

The plan would be to offer ten years tax-free for Italian and foreign retirees relocating their tax residence to Sicily, Sardinia or Calabria. Pensioners would be required to live in participating municipalities for at least six months and one day per year to qualify for the scheme. Sicily, Sardinia and Calabria would be the first three areas of southern Italy to pilot the project. Read more

Civil Unions

Civil Unions The so-called, Legge Cirinnà, passed on 20 May 2016, regulates and recognises civil unions between same-sex couples, giving them the right not to be discriminated against. How can a civil union be made? Same-sex people of 18 years and over, m ay enter into a civil union. How? By going before the local […]

Renouncing an Italian inheritance

Renouncing an Italian inheritance Is it possible to renounce an Italian inheritance? Receiving an Italian inheritance does not always represent an advantage. Due to important legal ramifications, it is a matter which you should carefully evaluate. Accepting an inheritance also implies becoming responsible for the decedent’s debts. Heirs, therefore, run the risk of paying off […]

What Is A Power of Attorney?

You may be familiar with the phrase, “power of attorney,” but you may not know its purpose or when to use it. This article covers the basics of a power of attorney and how it could be helpful if you are thinking of purchasing a property, if you already own property or if you have inherited assets in Italy.

• A power of attorney – “Procura” in Italian, is a legal document by which you (the “principal”) give certain powers to someone else. This person becomes your “attorney” (the “agent”); authorised to act for you, on your behalf.
• A power of attorney document specifies exactly what powers you, the principal, give to your selected attorney / the agent.
• You can limit the powers you give to your attorney. This is known as, Procura Speciale in Italian.
o For example, if you are buying a house in Italy, but the day you are due to be in Italy to complete the sale you have to be at work in the UK, you can give your attorney / agent the power to sign the deed in your absence.
o Or, suppose you live in the USA and have inherited assets in Italy, but are unable to make it to Italy to file for probate, re-register assets in your name or organise legal separation of assets from a communal inheritance, you can give your attorney / agent the power to manage the Italian succession procedure.
• A general and durable power of attorney, Procura Generale in Italian, however gives your attorney the power to do almost anything you could do.
• Both Procura Speciale and Procura Generale are usually terminated when the principal dies or becomes legally “incapable”. A power of attorney can however be revoked at any time by using the same legal document used to confer it in first place.
• If you are considering conferring a power of attorney, you should be extremely careful about who you appoint to represent you. You are delegating the management of your affairs to someone. It is therefore of the utmost importance that you appoint a trustworthy and competent person, preferably a professional. It is not advisable to confer power of attorney on someone who is inexperienced or someone with whom you might have a conflict of interest.
• A power of attorney for use on Italian territory is a formal document, which must meet various legal requirements; it is generally examined by the competent authorities in a very rigorous way. The person you entrust with your power of attorney will need to sign the document in the presence of a public officer in his / her home country.
The USA, UK and Australia are signatories of The Hague Convention of 5th October 1961 Abolishing the Requirement of Legalisation for Foreign Public Documents. You will however need an Apostille Certificate or Stamp, also known as the Hague Apostille, as proof of authenticity. Check procedures with the UK Foreign and Commonwealth Office, the US Department of State and the Australian Department of Foreign Affairs and Trade.

A power of attorney is very sensitive. You are entrusting your rights and affairs to someone else. It is therefore advisable that you seek the help of a professional when drawing up the document.

Glossary

In order to better understand information provided on the website, it is important to know the meaning of the terms and expressions in use.

– Chiamato all’eredità – Successor

He/she is the person who becomes entitled to inherit assets of the deceased person by virtue of any kind of applicable disposition (testamentary or legitimate succession).

– Denuncia di successione – Statement of succession

The Statement of succession needs to be filed by at least one entitled person within 12 months of death. It shall be filled out with all information and data concerning the deceased’s properties. Therefore it is important that it is drafted by a competent independent professional who will be also in the position to submit it to the competent Revenue Office.

– Diritto di precedenza – precedence by proximity

The principle of precedence by proximity of the degree of relationship means that the successor the most closely related to the deceased within the same line of successors – privileged collateral line or ordinary collateral line – excludes more distant relatives from the succession.

– Erede – Heir

He/she is the successor who has accepted the inheritance to which he/she is entitled.

– Legato – Legatee

A legatee is a physical person or legal entity receiving assets or money under the terms of a Will. The quality of legatee is acquired automatically without the need to be formally or tacitly accepted. He/she/it is not considered an heir, and does not have the same obligations towards the succession -for example in case of debts of the deceased.

– Successione legittima – Legal succession

A legal succession is a succession that is not ruled according to the deceased’s wishes as expressed in a Will, but follows rules of the Civil Code.

– Successione per rappresentazione – Succession by representation

In this case, the assets of the deceased, who died intestate, are transferred – also partially, to the descendants by representation. In this case, the entitled successor renounces the inheritance and the corresponding quota is divided into as many equal shares as the surviving descendants in the closest generation.

– Successione testamentaria – Testamentary succession

A testamentary succession is a succession that is ruled according to the deceased’s wishes as stated in a valid Will, drafted in compliance with the law.

– Testamento – Will

The deed through which a person, the testator, appoints one or more persons to manage his estate and provides for the transfer of his/her property at death.

Italian Inheritance Tax

If the deceased was resident in Italy, Italian Inheritance Tax (Imposta sulle Successioni) is applied to all the assets worldwide belonging to the deceased.

Otherwise in case of a non resident, the Italian Inheritance Tax rate is calculated on the assets located in Italy. It would be advisable to seek advice from specialized professionals, since Italy grants different international agreements, which prevent the double taxation of estates.

There are different rates which are applied to each heir according to the degree of kinship to the deceased. We can sum up the different rates in the following way:

  • 4% to be paid for transfers to the surviving spouse and children, with an exemption of Euro 1,000,000 for each beneficiary
  • 6% to be paid for transfers to brother and sisters of the deceased, with an exemption of Euro 100,000 for each beneficiary
  • 6% to be paid for transfers to relatives within the fourth degree of relationship to the Deceased, and other relative on the spouse side up to the third degree (no exempt amount is available)
  • 8% to be paid for transfers to any other (unrelated) parties.

Both rates and exemptions according to the current Italian inheritance tax regime are calculated over the whole net value of the assets included in the deceased’s estate. This amount is net of liabilities and all deductible expenses, such as debts of the deceased, medical and funeral expenses. The assets involved in the inheritance procedure are immovable properties, companies, shares/holdings, credits, money deposited in a bank account.

To sum up, a schematic table with all information concerning the current Italian inheritance tax regime:

Degree of kinship Exemption Rate to be applied over the exceeding quota
Spouse or direct members of the family Up to 1 million euro 4% 4%
Brothers and sisters Up to 100.000 euro 6%
Family members up to the fourth degree of kinship, direct relatives and collateral relatives up to the third degree No exemption 6%
Others No exemption 8%
In any case of inheritance of real estate property, the payment of a 3% (or € 168 as above described) registration tax is required

It is also important to be aware that Italy has signed double taxation agreements with several countries (amongst others, the United Kingdom and the United States). To safeguard rights and to be sure of paying the correct amount according to the Italian inheritance tax regime, it is highly advisable to obtain professional expertise in the field of cross border inheritance matters.

Testamentary Succession

Italian inheritance law dates back to the Roman Law tradition. It is based on the principle that close family members of the deceased merit special protection, partially limiting the right of the testator to dispose of his/her own assets entirely as he/she wishes.

“Testamentary succession” can be defined as the assignment of the hereditary assets (“estate”) of a deceased testator in compliance with the decisions of the testator as set out in an Italian Will. A Will represents the legal document drafted and signed by the deceased through which s/he disposes of his/her estate after his/her death.

In case of foreign Wills, Italian law provides that they must be authenticated by an Italian Public Notary before executing the probate. Managing documents drafted in a foreign language and covered by a foreign jurisdiction in Italy can raise a number of difficulties. As a matter of fact, the notary will not publish or legalize documents drafted in a foreign language unless duly translated in Italian. This will most likely require a qualified translator/interpreter whose costs could be substantially higher than drafting an Italian Will.

Drafting an Italian Will minimizes 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.

Following the death of a testator with an Italian Will, the Will is registered and published by the competent Italian authorities

One of the principles of Italian legal succession is the protection of the family. As a result of this, some heirs cannot be excluded from the succession, these heirs are known as forced heirs, even in case of testamentary succession. A part of the deceased’s assets (reserved quota) must be assigned necessarily to forced heirs. Italian Civil Code determines exactly the inheritance quota available to the testator, that is to say which is the quota that he/she can dispose of without any limitation.

Italian law reserves a quota of the inheritance to forced heirs, who are:

a) Legitimate, natural, adopted children
b) Married partner
c) Legitimate ascendants (only in absence of children)

Outlined below, the reserved quota and the available quota dependent on relationship to the deceased:

Heirs Reserved quota (legitimate quota) Available quota
Spouse ½ ½
Spouse + 1 child 1/3 spouse, 1/3 child 1/3
Spouse + 2 or more children ¼ spouse, ½ children ¼
Spouse and ascendants ½ spouse, ¼ ascendants ¼
1 child ½ ½
2 or more children 2/3 1/3
Ascendants 1/3 2/3
Spouse, ascendants and brothers and sisters ½ spouse, ¼ ascendants ¼
Spouse and brothers and sisters ½ spouse ½
Ascendants and brothers and sisters 1/3 ascendants 2/3
Brothers and sisters / All assets

Whether through legitimate succession or testamentary succession, a “Dichiarazione di Successione” (Statement of Succession) must be submitted within one year of death.

Notwithstanding what has been stated before, it is also worth mentioning that in cases of non Italian citizens, the situation could also enforce different legal provisions, and only a lawyer specialized in cross border inheritance issues can provide assistance in derogating the above mentioned regulations. This is another reason that why it is important to draft an Italian Will.

Italian Inheritance

Legitimate Succession

If the deceased dies intestate, lacking a Will through which the deceased has disposed of his/her estate, Italian law determines which relatives have legitimate succession rights and the corresponding quota of assets. In absence of any persons entitled to succeed up to the 6th degree of kinship, the inheritance is assigned to the State .

The kinship can be of two different types:

  • direct kinship (father – children; grandfather – grandchildren): in this case family members descend directly from one another;
  • collateral kinship (brothers and sisters; uncle – nephew): in this case, despite having a common ascendant, family members do not descend directly from one another.

Family members who are entitled to be considered as legitimate heirs according to Italian inheritance law are:

  • The spouse
  • Children, where legitimate children have the same rights as natural, adopted and legitimated children,
  • Legitimate ascendants (father, mother, grandfather, grandmother),
  • Relatives
  • Other family members up to the sixth degree of kinship,
  • The State (lacking any other heirs or dispositions).

The closeness of kinship determines inheritance and will exclude more distant kinship, “Diritto di Precedenza” (Precedence by Proximity). Should heirs be the family members of the same degree of kinship, they will each receive an equal share of the deceased’s estate.

Whether through legitimate succession or testamentary succession, a “Dichiarazione di Successione” (Statement of Succession) must be submitted within one year of death.

All required procedures can be carried out more smoothly with the assistance of an independent legal advisor who can interface with the competent authorities and prepare all the necessary documents and paperwork.

legitimate-succession

Inheritance distribution according to legitimate succession