Implications of Brexit for British individuals with interests in Italy
While the world is watching the Brexit situation dramatically unfold, we have been fielding countless questions regarding the legal implications for British citizens with interests in Italy.
Now we have decided to do something we have never done before: give away a wealth of information that we had previously shared only with clients. On this page we address the most frequently asked questions.
Brexit: how is it going to impact the life of British people?
Since we are receiving new questions daily, we are constantly updating this page, addressing new issues that arise as the Brexit scenario evolves.
If you have a question about Brexit and Italian law, let us know.
Submit your Brexit questions HERE
Brexit: Italian Legal Implications
1) Introduction to Brexit in Italy
For more than 20 years we have been working with British people who have interests in Italy. Our mission has always been to make Italian bureaucracy easy for them.
To be fair, the Italian legal system and bureaucracy in general are complicated even for Italians. However, when you are in a different country, with a different culture and a different language, everything might feel overwhelming.
Our goal is to listen to our clients and process their matters on their behalf so that they can achieve the desired results more quickly, cost effectively and smoothly.
Over the past months we have received many questions about the implications of Brexit for British people who have interests in Italy.
This web page addresses some of the most common concerns and offers options to prepare in the best way before the end of the Brexit implementation period on 31 December 2020.
You might be interested in reading our material about Brexit if you are a British citizen who lives in Italy, or a British citizen who does not live in Italy but has interests in Italy. For example, if you own an Italian property, or if you have family members in Italy and you wish to be able to visit without restrictions.
If you have a question about Brexit and Italy that is not included in this material, please let us know.
IMPORTANT: Since negotiations between the UK and the European Union are still pending, it is not possible to predict the exact effects of Brexit after the end of the implementation period (31 December 2020). However, the European Union has pledged to preserve the rights of those living in the EU by the end of such period. This guide will give you an idea of the main framework of the likely applicable rules.
2) Immigration and Residence in Italy for British citizens
A British citizen who is registered as a resident in Italy by the end of the implementation period is able to stay in Italy without the need of a visa. All British citizens who will be registered as residents in Italy by 31 December 2020 will retain their right to stay in Italy and enjoy the Italian universal health care system, education, entitlement to work etc.
Bear in mind that you acquire the status of registered resident in Italy by filing a residence application with the Resident Register of a local Council (Municipality), in Italian: Ufficio Anagrafe del Comune.
If you are not registered as a resident, the fact of simply having lived in Italy for many years does not per se qualify you to freely remain in Italy.
If you have lived in Italy for five years or more, you will be eligible for a permanent residence permit. If you have been living in Italy for less than five years you will be eligible for a temporary permit, which will be valid for five years.
You shall go to your local police station in person to get the new residence permit before 31 December 2020. Your current EU residency certificate, temporary or permanent, will stay valid until you get your new non-EU residency one.
-A British citizen not registered as an Italian resident:
Although the UK left the EU without a deal, travel to Italy will remain the same as before until at least 31 December 2020. British citizens will not need to apply for a visa to travel or work in Italy during this time.
After 31 December 2020, standard immigration provisions applicable to citizens of non-EU and non-Schengen States shall apply to British citizens who are not registered as Italian residents at the time of Brexit.
Therefore, for example, British citizens will be allowed to stay in Italy for no longer than 90 days within any period of 180 days.
-How does a British citizen apply to become an Italian resident BEFORE the end of 2020?
Before the end of 2020, British citizens can apply for residence and receive it within days. The application shall be filed with an Ufficio Anagrafe of any Italian Comune. The application can be filed in person or through an authorized representative.
The requirements to file the residence application are not very complicated to meet. For example, you shall prove that you have a place to stay in Italy, for example a property purchase contract, property lease agreement, or a letter of hospitality by somebody who can host you. In another post we have the full list of requirements.
Within 2-3 business days the Comune registers your request. If your residence application is processed by the Comune by 31 December 2020 (typically the Comune takes 2 to 5 business days to process a residence application), you keep the status as an Italian resident.
However, within the 45 days after you file the residence application the local police shall check that you are actually living at the declared address. If the address verification process fails, the Comune might retroactively deny the application. As a consequence, you would be treated as a non-Italian resident for all purposes.
-How does a British person apply to become an Italian resident AFTER 31 December 2020?
In order to apply for Italian residence after 31 December 2020, a British citizen shall first apply for a visa through the Italian Consulate in his/her country of residence (domicile).
Requirements to apply for a visa are much more expensive and time consuming to meet compared to those applicable to EU citizens applying to become Italian residents.
After (if) the visa is granted, the British citizen shall apply for a permit to stay (permesso di soggiorno).
After the Permit to Stay is granted, the British citizen can apply for Italian residence.
Should the British citizen be married to an EU or a Schengen member State citizen who is registered as an Italian resident, there would be the option to apply for a long stay permit directly in Italy without the visa application step.
3) Italian Citizenship
Brexit: implications on Italian citizenship applications
Italian citizenship by naturalization
The Italian citizenship rules affected by Brexit are those regarding naturalization. Naturalization is the process of acquiring citizenship after legally living in a country for a certain amount of time.
According to Italian citizenship law, a citizen of the European Union who has been residing in Italy for at least four years can apply for Italian citizenship (the standard naturalization time for non-EU citizens is 10 years). With Brexit we can have two main scenarios:
i) A British citizen who has been a registered resident of Italy for four years:
the Italian citizenship application will be considered on the basis of EU nationality if it is submitted before 31 December 2020.
ii) A British citizen who submits the application for Italian citizenship by naturalization after 31 December 2020:
such person will be a non-EU citizen thus he/she shall need to prove legal residence in Italy for 10 years in order to apply for Italian citizenship naturalization (the years spent prior to Brexit will count).
4) Italian Taxes after Brexit
The Italian tax system provides some exemptions that will apply differently for British people after Brexit implementation period.
Here is a list of the tax areas that are of primary concern for the majority of British citizens with interests in Italy.
ii) Taxes applicable to transfer of Italian property by separation or divorce
When a property is transferred to another subject the transfer of the title is subject to transfer taxes. Residential property transfers between individuals is subject to 2% to 9% transfer tax.
More specifically, if a property (or a share of it) is owned by a married person or a married couple, when they get separated or divorced they can elect (or be ordered in a court decision) that said property (or share of it) shall be transferred to one of the spouses or to one of their children. In this case, the transfer is not subject to transfer taxes.
Some Italian notaries claim that such exemption applies only in favour of Italian and EU citizens. Therefore, after Brexit implementation period, a property transfer based on separation or divorce could be more expensive for British people.
If you started the Italian property transfer process based on a separation or divorce it might be time to speed things up and complete the process by 31 December 2020 in order to take advantage of the exemption above.
iii) Lawyers and Notary services (VAT)
Legal services and notary services are subject to 22% VAT. However, some legal services provided by Italian lawyers and Italian notaries to non-EU residents are considered lacking “territoriality” and thus are not subject to VAT.
Therefore, from 1 January 2021, British citizens who are not residents of any EU country will no longer be subject to Italian 22% VAT with respect to those selected legal or notary consulting services. I guess this is good news for them!
If you have a big legal bill coming up for payment and you have the option to delay it to 2021, it might be worth bearing this aspect in mind.
iv) Custom Taxes
Many British people have enjoyed moving household goods to Italy to furnish a holiday home or their new retirement house, in both cases completely custom free.
After the Brexit implementation period, custom tax will apply to transportation of goods from the UK to Italy (or any other EU country). Custom duty exemptions will apply to British people who wish to bring their personal household goods to their home in Italy, if they are Italian residents at the time of clearing Customs.
v) Italian Income Taxes & Miscellaneous Taxes
For the majority of private individuals Brexit will not have a particular impact on other tax aspects. For example, there is no discrimination based on EU or Non-EU citizenship for income taxes, inheritance taxes, property purchase taxes, property annual taxes, wealth taxes etc.
However, many British people who are rushing to register as Italian residents Italy before the end of Brexit implementation period shall bear into consideration that after they are (living or registered as resident) in Italy for more than 182 days per year during an Italian tax year (1 Jan. – 31 Dec.) they are considered Italian tax residents for the purposes of the Italian worldwide taxation system.
The bilateral treaty between the UK and Italy for the avoidance of double income taxation and the one for the avoidance of inheritance and gift double taxation will remain into force seamlessly.
In light of Brexit, tax and estate planning for British people considering dual residence are highly recommended.
5) British-Italian Inheritance and Estate Planning
The European Regulation 650 of 2012 regulates international succession matters involving assets in the European Union.
The UK did not “opt in” the EU Regulation 650/2012. This means that the UK was not subject to the rules provided by such Regulation. Therefore, Brexit is not expected to imply any remarkable change with respect to how to handle the succession of a British person with assets in Italy, regardless whether the deceased was an Italian resident or not at the time of death.
Brexit might have a very limited impact with respect to the interpretation of some rules that would be of relevance in exceptionally few cases.
The Regulation has specific general provisions addressing the succession of people who do not live in the EU.
Briefly, this will apply to the estate of a British citizen leaving in Italy movable property (such as a bank account) and immovable property (such as a house). Two scenarios:
case 1) The deceased is domiciled in (and a habitual resident of) the UK at the time of death:
a) Died intestate (without a will):
i) movable property is subject to the UK succession law;
ii) immovable property is subject to Italian law;
b) Expressly chose the UK law to apply to his/her succession (e.g., in a will or codicil):
Entire estate (movable and immovable property) is subject to the UK succession law.
case 2) The deceased is domiciled in (and a habitual resident of) Italy at the time of death:
a) Died intestate (without a will):
Entire Italian estate (movable and immovable property) is subject to the Italian succession law;
b) Expressly chose the UK law to apply to his/her succession (e.g., in a will or codicil):
Entire Italian estate (movable and immovable property) is subject to the UK succession law.
In other words, if a British person makes an express choice to elect the UK law to apply to the succession, this choice shall apply in Italy with respect to the entire Italian estate regardless of the fact that the EU has not opted in to the Regulation and/or is not a EU country.
The above actually applies for successions of people who die by or after the end Brexit implementation period.
We have assisted countless British people with their estate planning and successions matters involving Italian assets.
For the vast majority of cases, British citizens prefer to elect their national law as the one to govern their succession, also with respect to their assets in Italy, regardless of their residence. If they clearly express such choice in writing this will facilitate the process greatly when the time comes.
The recommendation therefore, regardless of the residence status of the British citizen with assets in Italy, is to make a will, even just a handwritten one-page-one-paragraph statement to declare the intention to elect the UK law to apply, if this is the preference of the testator/testatrix.
Each person’s scenario and particular case is different. Especially in estate and succession planning it is highly advisable to discuss the specifics of a will or disposition upon death with an experienced consultant.
In estate planning one size never fits all.
6) Italian Bureaucracy for British citizens
Italian bureaucracy is not easy. One of the most common requirements to complete bureaucratic tasks is to provide government offices with personal information regarding the applicant or other people, such as vital records, personal income etc.
The Italian law, however, gives users the opportunity to declare such information instead of requiring the user to file documentation as proof. The Italian law also accepts that such declaration be done in the form of a simple letter signed by the user without the need of notary authentication.
By means of such declaration, users can declare all their vital record information, inheritance entitlement etc.
Also, the Italian law extends the possibility of filing such simple declaration, instead of the actual supporting documents, to all EU residents.
After Brexit implementation period, British people who do not live in Italy will no longer be able to simply use the declaration for certain Italian bureaucratic matters. They will be required to provide either actual foreign documents, along with apostille certificate and certified translation, or, when permitted, affidavits, in the form of a statement signed in front of a UK notary or solicitor and sometimes also in front of two witnesses, and then acquire apostille certificate and certified translation.
One of the cases when the opportunity to submit a declaration instead of the original document comes in particularly handy is, for example, for the inheritance succession of a property located in Italy.
In order to claim an Italian estate by inheritance, the Italian law requires the heir to file a “family certificate” of the deceased.Family certificates in Italy are issued by the council (municipality) where the deceased was a resident at the time of death.
The family certificate includes information about spouse, children and siblings of the deceased.
If the deceased was a UK citizen living in the UK, there is no way to satisfy the bureaucratic requirement of filing a family certificate. Before the end of Brexit implementation period, British citizens living in the EU can file, instead, a simple letter stating who the family members of the deceased were at the time of death. After Brexit, British citizens living in the UK shall go through the extra steps of (1) preparing an affidavit in compliance with specific requirements, (2) get the signature authenticated by a notary or solicitor, (3) apply for apostille certificate at the Foreign and Commonwealth Office, (4) obtain a certified translation (for example in an Italian Court under oath) and pay the related fees, charges and taxes.
The same would apply to any situation where a simple statement signed by the user is accepted by an Italian government office only under the condition of EU citizenship.
However, each local authority applies its own interpretation of national rules and it would not be unlikely to be in a scenario where, even before the end of the Brexit implementation period, a local municipal representative might apply a policy applicable to non-EU citizen.
7) Work, Health Assistance, Education
Health Assistance, Education and Work are areas of interest and concerns for many British people. The general rule is that all government services, such as health assistance and education, shall keep being supplied to British people who are legally living in Italy by the end of Brexit implementation period, as well as to those who will acquire legal residence afterwards.
Regarding work privileges, there will be no restrictions for British citizens who are legally living in Italy: they can keep their job or get a new one as they please.
British people who will want to start working in Italy after Brexit will be required to apply for a work visa or another resident permit granting work privileges. For example, a permit to stay by marriage gives entitlement to work in Italy without restrictions; a study visa gives work entitlement for a certain amount of hours per week.
In order to apply for a work visa British people will need to satisfy several requirements, such as having in place an employment contract and keeping it for the entire duration of the stay in Italy.
The common consideration for the topics discussed above is that Brexit will affect the life of many British citizens in several manners. If you wish to prepare in the best way possible it is advisable a thorough review of your personal and estate circumstances and goals and take action by the end of 2020. Planning is the key to minimize the negative effects and maximize the benefit of some opportunities that are still available.
Additionally, it is important to bear in mind that, traditionally, most Italian public offices significantly slow down their activities before the December holidays. If you are planning to become an Italian resident, it is advisable making plans to do so by the end of November 2020.
Book a phone consultation now with an experienced English speaking Italian lawyer to prepare yourself.
By The Italian Bureau™
With the assistance of Nick M. Metta