A raft of recent legislation has introduced several changes to the established rules on Italian succession. Completely new rules apply to successions with an international element, following the coming into force of an EU Regulation on the 17th August 2015. This new legislation was intended to be a “simplification” or an improvement of the previous rules, as always, the devil is in the detail of its implementation. It is clear, however, that all existing Italian Wills should be revised in light of these changes.
1) – New Italian legislation – Innovation ?
- a) – The overall value of an Estate / limit within which it is no longer necessary to lodge an Italian Inheritance Tax Return (Dichiarazione di Successione) has been increased from Euro 25,833 to Euro 100,000. Thus where the total value of the Estate does not exceed Euro 100,000, excluding property or real estate and complies with other, detailed rules, Italian successions will be greatly simplified.
- b) – It is now expressly provided that where, following the lodging of an Italian Inheritance Tax Return, the whole of the Estate or even only some of the assets devolve in a different way than stated on the Return, due to a subsequent event, it will be necessary to lodge a supplementary Italian Inheritance Tax Return (Dichiarazione sostitutiva o integrativa).
- c) – To simplify the succession procedure it will now be possible, in most cases, to use certified copies rather than the original documents, which must be lodged with / supplement an Italian Inheritance Tax Return (Dichiarazione di Successione).
- d) – In a context where Italy was subjected to the European Commission`s infringement proceedings (Procedure d` infrazione) for suspected breach of European legislation, new rules exempt from Italian Inheritance Tax gifts to foreign charities (both lifetime gifts and gifts on death / by Will), where such charities originate from other EU member States. Subject to reciprocity, this new principle also applies to charities from other States, outside the EU.
- e) – Government Bonds (Titoli del debito pubblico) or other securities issued by EU member States are now exempted from Italian Inheritance Tax as are their Italian equivalents.
Meanwhile the Italian Supreme Court has recently published important Judgments / introduced principles which affect Italian successions and Italian Wills.
In an Italian intestate succession, the surviving spouse`s right to use the matrimonial home and chattels should now be first valued and then excluded from the Estate, before calculating the respective share to which the surviving spouse and the other beneficiaries (Eredi ) are entitled.
Also, in the case of an Italian hand-written Will (Testamento olografo), where the hand of the Testator has been “guided” by the hand of a third party, the Will has been declared null and void. This is because the requirement of the Testator`s handwriting is not satisfied if someone else controls the hand of the Testator while he is writing his holograph Will.
2) – All change on Italian International Wills.
Italian private international law relating to succession has changed on the 17thAugust 2015, when EU Regulation 650/2012 on international successions, that is Estates with an international element, has become applicable in Italy and most of Europe.
The main tenet of Italian conflict of laws in succession matters, that the law of nationality regulates succession, has been replaced by a different legal criteria. The law of the country of “habitual residence” of the Deceased, at the time of death, will regulate his / her succession.
Unfortunately there is no definition of “habitual residence” as such in the new Regulation, and the courts are directed to consider a number of factors in interpreting its meaning (“..overall assessment of the life of the deceased during the years preceding his death and at the time of his death …”). It is the writer` s considered opinion that this will not facilitate / improve matters, both for potential Testators in the European Union nor for their professional advisers.
Matters are likely to become very complicated in the case of “globe trotter” Deceased / Testators. Nationality (the former discriminating factor under Italian law) was a clear and well defined concept that was easy to ascertain. All you need was to see the Deceased` s passport and you could then confidently establish which system of law applied to his / her succession.
On the other hand, “Habitual residence” of the Deceased is not so easy to ascertain. This is one of the reasons why it may still be advisable to make a Will in all cases of doubt, with an express election as to the law that will be applicable to one` s succession, where foreign real estate will devolve on death.
In the long term, the main benefit of the new Regulation will be that most countries in Europe apply the same rules, so the scope of conflict among the probate and succession rules and practices of different EU jurisdictions will be reduced.
Because of the fundamental changes introduced by the new Regulation and how it will affect the applicable legislation, all existing Wills with an international element related to Italy / Italian properties should also be reconsidered.
Under the new Regulation it is still possible to expressly elect, by Will, that a different system of laws, other than the one of the country of “habitual residence” will regulate the Testator` s succession. Here however, the main change was that, whereas under former Italian legislation it was possible for a Testator to opt for the law of the country of his / her residence at the time of death, under the new Regulation, after the 17th August 2015, it will only be possible to elect for the law of nationality of the Testator, as opposed to the general rule, of the country of his / her habitual residence. From an Italian point of view, the roles are completely reversed !
Thus for instance, where an British Testator owns a property in Italy and is habitually resident there, under the new Regulation, if nothing is done, Italian law will apply to his / her succession, whereas if he / she makes a Will, it will be possible for such Testator to elect in writing in his / her Will that his / her succession will be regulated by English Law.
The difference this testamentary election makes, can be substantial.
Under Italian law, the members of the Testator` s immediate family have a protected statutory minimum entitlement (Quota di legittima), which cannot be affected by the provisions of any Will a Testator may make (sometimes called the “Forced heirship” rule). No such fixed, minimum statutory entitlement exists under English law, where in normal circumstances a Testator is free to make the Will he / she likes, testamentary freedom applies.
Under Italian law, there is no specific statutory requirement for personal representatives (Executors / Administrators) to be appointed, whereas under English law there is this requirement.
Generally Italian law and English law of probate and succession have basic differences, which are not just matters of detail. This is why an election as to the law applicable to your succession may be useful, and this is without considering the tax point of view !
If you are “habitually resident” in England, and own properties in Italy, you may still need to make an Italian Will.
You should keep in mind that under English Law there is a general rule providing that where foreign immovable property (buildings and / or land) is included in your Estate, a general reference (Rinvio) is made to the succession law of the country where your immovable assets are located. That is, English law makes a general reference to the succession law of the country where your foreign real estate / your foreign immovable assets are located. You can avoid this with a correctly worded Will.
If you own real estate in Italy, even if you are domiciled and “habitually resident” in England, Italian law will apply to your succession, as far as your Italian property is concerned and this could have substantial implications as to how your Italian assets will devolve upon your death.
This matter is further complicated by the fact that the United Kingdom, Ireland and Denmark have elected not to be parties / not to be bound by the new Regulation. So within the European Union, there are countries like Italy, France, Spain, Portugal etc. which are subject to and bound by the new Regulation and other countries like the United Kingdom, Ireland etc. where the new Regulation does not apply and the current succession conflict of laws rules will remain into force after the 17th August 2015.
This could cause new / unexplored conflicts of legislation between different systems of succession law in different countries, and because there is no court ruling / definite and binding guidance yet on the new Regulation, these new issues will be particularly challenging, even for the “experts”.
There is nothing permanent, except for change.
Dr Claudio Del Giudice
Copyrights reserved 26.06.2015