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How a Mortgage Works in Italy: Legal Aspects

A mortgage in Italy (mutuo ipotecario) is a legal contract between a borrower and a lender, typically a bank, to finance the purchase of real estate. The process is regulated by Italian civil and banking laws, ensuring transparency and security for both parties. Below is a breakdown of how a mortgage legally works in Italy.


1. Legal Framework & Regulations

In Italy, mortgages are primarily governed by:

  • Italian Civil Code (Codice Civile) – Establishes the legal principles of contracts, property rights, and obligations.
  • Consolidated Banking Act (Testo Unico Bancario – TUB) – Regulates financial institutions and banking operations.
  • Consumer Credit and Mortgage Directives (EU Regulations) – Ensures fairness and transparency in lending practices.

Banks must comply with these regulations when offering mortgages to individuals and businesses.


2. Mortgage Structure & Key Elements

A mortgage in Italy is legally composed of the following elements:

A. Loan Agreement (Contratto di Mutuo)

This is a legally binding contract between the borrower (mutuatario) and the lender (mutuante), specifying:
✔️ Loan amount (capitale)
✔️ Interest rate (fixed, variable, or mixed)
✔️ Repayment period (durata del mutuo)
✔️ Installments & payment schedule
✔️ Any penalties for late payment or early repayment

B. Mortgage Registration (Ipoteca)

A mortgage is secured by a lien on the property. This means:
🏡 The bank registers a first-degree mortgage on the property at the Land Registry (Conservatoria dei Registri Immobiliari).
⚖️ If the borrower defaults, the bank has the right to foreclose and sell the property to recover the debt.
📝 The mortgage remains registered until the loan is fully repaid.

C. Notary Role (Notaio)

A public notary plays a crucial legal role in the mortgage process:
📜 Drafts and authenticates the mortgage deed (atto di mutuo ipotecario).
🔎 Performs due diligence on the property, ensuring no legal disputes or outstanding debts.
🏛 Registers the mortgage at the Land Registry.

Without the intervention of a notary, the mortgage is not legally valid.


3. Legal Steps to Obtain a Mortgage

Step 1: Pre-Approval & Financial Evaluation

  • The borrower submits financial documents to the bank (income proof, credit history, tax returns).
  • The bank assesses the borrower’s financial stability and loan eligibility.

Step 2: Property Due Diligence & Appraisal

  • A property valuation (perizia immobiliare) is conducted by a bank-appointed surveyor.
  • The notary checks the property’s legal status and ensures it has a clean title.

Step 3: Signing the Mortgage Deed

  • The borrower and lender sign the mortgage contract (atto di mutuo) in front of a notary.
  • The contract is registered with the Land Registry, officially establishing the mortgage.

Step 4: Funds Disbursement & Property Transfer

  • Once the mortgage is registered, the bank disburses the loan.
  • If the loan is for purchasing a home, the funds are typically transferred directly to the seller.

4. Default & Legal Consequences

If a borrower fails to meet repayment obligations:
⚠️ The bank can initiate judicial foreclosure (pignoramento immobiliare).
⚠️ The property may be auctioned through the court to recover the outstanding debt.
⚠️ In some cases, the borrower may negotiate debt restructuring (rinegoziazione del mutuo) with the bank.


5. Early Repayment & Loan Portability

  • Early Repayment (Estinzione Anticipata) – Under Italian law, borrowers can repay their mortgage early, often without penalties (except for older contracts).
  • Mortgage Portability (Surroga del Mutuo) – Allows borrowers to transfer their mortgage to another bank for better terms, free of charge.

Final Thoughts

A mortgage in Italy is a well-regulated financial product that involves strict legal procedures to protect both the borrower and the lender. The presence of a notary, mortgage registration, and banking regulations ensures transparency and compliance. Anyone considering a mortgage in Italy should seek legal and financial advice to navigate the process effectively.

Taxation of Income for Italian Residents Who Are U.S. Citizens

Understanding Tax Obligations for Dual Tax Residents

Italian residents who are also U.S. citizens face a unique and complex tax situation, as they are subject to taxation by both Italy and the United States. This article provides an overview of the key aspects of their tax obligations, double taxation treaties, and potential tax planning strategies.

1. The U.S. Tax System and Its Implications

The United States follows a citizenship-based taxation system, meaning that all U.S. citizens, regardless of where they reside, must file and potentially pay U.S. taxes. This includes Italian residents who hold U.S. citizenship.

Key U.S. tax obligations include:

  • Filing an annual U.S. tax return (Form 1040), reporting worldwide income.
  • Declaring foreign bank accounts via FBAR (FinCEN Form 114) if the total value of all foreign accounts exceeds $10,000.
  • Filing Form 8938 (FATCA requirements) if foreign financial assets exceed certain thresholds.
  • Reporting foreign business interests through Form 5471 or Form 8865, if applicable.

2. The Italian Tax System and Residency Rules

Italy imposes taxes based on residency, meaning individuals who are considered Italian tax residents must pay taxes on their worldwide income. A person is considered a resident for tax purposes if they meet any of the following criteria:

  • They are registered in the Anagrafe (Resident Registry) for most of the tax year.
  • They spend more than 183 days in Italy within a calendar year.
  • Their principal place of business or economic interests is in Italy.

As a result, U.S. citizens residing in Italy are subject to Italian income tax (IRPEF), which applies progressively, as follows:

Income Bracket (€)Tax Rate (%)
0 – 28,00023%
28,001 – 50,00035%
Over 50,00043%

3. The U.S.-Italy Tax Treaty and Avoiding Double Taxation

To prevent double taxation, the U.S.-Italy Tax Treaty offers mechanisms to mitigate tax burdens:

  • Foreign Tax Credit (FTC): The U.S. allows citizens to credit taxes paid to Italy against their U.S. tax liability, reducing the risk of double taxation.
  • Foreign Earned Income Exclusion (FEIE): U.S. citizens who meet the physical presence or bona fide residence test can exclude up to a specified amount ($120,000 in 2023) of foreign-earned income.
  • Totalization Agreement: This determines which country’s social security system applies to a taxpayer, depending on employment circumstances.

4. Special Tax Regimes for Foreigners in Italy

Certain foreign residents, including U.S. citizens moving to Italy, may benefit from preferential tax regimes, such as:

  • Regime Impatriati: Offers a tax reduction (70-90%) on employment income for highly skilled workers relocating to Italy.
  • Flat Tax Regime for New Residents: A fixed tax of €100,000 per year on foreign income, available for wealthy individuals.
  • Pensioner Tax Regime: Retired individuals moving to specific southern Italian regions may benefit from a 7% flat tax on their foreign income.

5. Practical Tax Planning Considerations

To navigate these complex obligations efficiently, U.S. citizens residing in Italy should consider the following:

  • Work with tax professionals who understand both U.S. and Italian tax laws.
  • Monitor foreign financial accounts to comply with FATCA and FBAR rules.
  • Optimize tax credits and exclusions to minimize overall tax liability.
  • Plan for social security contributions, as Italy and the U.S. have different systems.

Conclusion

Italian residents who are also U.S. citizens must carefully manage their tax responsibilities to avoid penalties and optimize their tax situation. By leveraging tax treaties, special regimes, and professional advice, they can ensure compliance while minimizing double taxation.

Italy Tax system

Understanding Taxes in Italy: A Simple Guide

Italy has a complex tax system with different taxes at the national, regional, and local levels. If you live or work in Italy, it’s essential to understand how taxes work, what rates apply, and when you need to pay. Let’s break it down in an easy-to-understand way.


1. Main Types of Taxes in Italy

There are two major categories of taxes in Italy: direct taxes (on income and assets) and indirect taxes (on goods and services).

A. Direct Taxes (Taxes on Income and Business)

  1. IRPEF (Personal Income Tax)
    • Paid by individuals based on their earnings.
    • Uses a progressive system, meaning the more you earn, the higher your tax rate.
  2. IRES (Corporate Income Tax)
    • A flat tax of 24% paid by companies and businesses.
  3. IRAP (Regional Business Tax)
    • Paid by businesses and professionals.
    • The rate depends on the region but is typically around 3.9%.
  4. IMU (Property Tax)
    • Applied to properties (except for primary residences in most cases).
    • The rate varies by municipality.

B. Indirect Taxes (Taxes on Goods and Services)

  1. IVA (Value-Added Tax – VAT)
    • Applied to the sale of goods and services.
    • Standard rate: 22%
    • Reduced rates: 10% (e.g., food, hotels) and 4% – 5% (e.g., essential items).
  2. Other Indirect Taxes
    • Registration taxes, stamp duties, and real estate transaction fees.

2. Personal Income Tax Rates (IRPEF)

IRPEF is progressive, meaning higher incomes are taxed at higher rates:

Income Bracket (€)Tax Rate (%)
0 – 28,00023%
28,001 – 50,00035%
Over 50,00043%

There are also deductions and allowances that reduce the total amount of tax you owe.


3. How and When to Pay Taxes in Italy

Taxes are usually paid through withholding, advance payments, and direct declarations.

For Employees & Pensioners

  • Taxes are automatically deducted from salaries and pensions.
  • Employers and pension funds take care of payments.

For Freelancers & Self-Employed Workers

  • Must file a tax return and pay in advance based on the previous year’s income.
  • Payments are made in two installments:
    • First installment: June 30
    • Second installment: November 30

For Companies (IRES, IRAP)

  • Companies pay in advance, similar to personal income tax.
  • The final balance is settled the following year.

For VAT (IVA)

  • Businesses must collect VAT from customers and pay it to the tax authorities.
  • Payments are usually quarterly or monthly.

4. How to Pay Taxes

Taxes in Italy are paid through:

  • F24 Form (submitted online via banks or the Italian Tax Agency).
  • Direct debit payments (for recurring taxes).
  • Online banking and tax portals.

5. Tax Returns and Deadlines

  • Personal Tax Returns (Modello 730 or Modello Redditi PF):
    • Employees & pensioners: By September 30.
    • Freelancers & self-employed: By November 30.
  • Business Tax Returns:
    • Usually filed by April 30 for the previous year.

6. Additional Local Taxes

  • TARI (Waste Collection Tax) – Paid to local municipalities for garbage services.
  • Regional and Municipal Surcharges – Additional small taxes applied to IRPEF, varying by location.

Final Thoughts

Italy’s tax system may seem complicated, but understanding the basics can help you manage your payments effectively and avoid penalties. Whether you’re an employee, freelancer, or business owner, staying informed about your tax obligations is key.

USA – Beneficial Ownership Information (BOI) Report

Beneficial Ownership Information (BOI) Report: Overview & Due Date

The Beneficial Ownership Information (BOI) Report is a filing requirement introduced under anti-money laundering (AML) laws to increase transparency in corporate structures. It mandates companies to disclose details about individuals who ultimately own or control them.

Who Needs to File the BOI Report?

Entities subject to the BOI reporting requirement typically include:

  • Corporations
  • Limited liability companies (LLCs)
  • Other entities registered with government authorities
  • Some trusts and partnerships (depending on jurisdictional rules)

What is Beneficial Ownership?

A beneficial owner is an individual who:

  1. Directly or indirectly owns 25% or more of the entity’s shares, voting rights, or capital; OR
  2. Exercises significant control over the entity, even without direct ownership.

Information Required in the BOI Report

Entities must provide:

  • Full name of each beneficial owner
  • Date of birth
  • Address (residential or business)
  • Government-issued ID number (e.g., passport, tax ID)
  • Details of ownership interest or control over the entity

BOI Report Due Date

  • For existing entities: Due by December 31, 2024 (varies by jurisdiction).
  • For new entities (formed in 2024 or later): Filing is required within 30 days of registration.
  • Updates/Changes: Any changes in beneficial ownership must be reported within 30 days of the change.

In light of a recent federal court order, reporting companies are not currently required to file beneficial ownership information and are not subject to liability if they fail to do so while the order remains in force. On February 5, 2025, the Department of Justice—on behalf of the Department of the Treasury (Treasury)—filed a notice of appeal of the district court’s order and, in parallel, has sought to stay that order as the appeal proceeds.

If the district court’s order is stayed, thereby allowing FinCEN’s Reporting Rule to come back into effect, FinCEN intends to extend the reporting deadline for all reporting companies 30 days from the date the stay is granted.

Il trattamento fiscale degli aeromobili da turismo

Qui il LINK per scaricare il PDF

Aeromobili extra UE, Trust USA e obbigo dichiarativo quadro RW

Alcune considerazioni sull’ obbligo di riportare nel quadro RW della dichiarazione dei redditi, la disponbilita’ di aeromobili formalmente NON intestati al contribuente. Come nel caso delle immatricolazoni FAA ( November ) , per le quali i non cittadini/residenti USA devono obbligatoriamente procedere con l’ intestazione ad un Trust.

Riporto dalle istruzioni Unico PF /2020:

“L’obbligo di compilazione del quadro RW sussiste anche nel caso in cui le attività estere di natura finanziaria o gli investimenti esteri siano posseduti dal contribuente per il tramite di interposta persona (ad esempio effettiva disponibilità di attività finanziarie e patrimoniali formalmente intestate ad un trust residente o non residente).

A titolo esemplificativo, devono essere indicati  ….. le imbarcazioni o le navi da diporto o altri beni mobili detenuti e/o iscritti nei pubblici registri esteri, ….. . “

Irrilevante la circostanza che il bene sia nel territorio italiano ( circostanza peraltro non suffragata dal pagamento della tassa di cui sopra) , poiche’ e’ superata da due considerazioni.

Anzitutto il tenore letterale delle istruzioni, e in secondo luogo  la natura stessa del bene – che e’ un mezzo di trasporto – non puo’ essere considerato per definizione in alcun luogo specifico .

Ma e’ l’ interposta persona che in caso di accertamento da parte dell’ Agenzia , sarebbe facilmente dimostrabile.

Va ricordato che il Trust che viene costituito per gli aerei November, ha contenuti contrattuali funzionali solo  alle esigenze di FAA per il recepimento dell’ iscrizione nei propri registri .

Non e’ un Trust che reggerebbe un Audit da parte dell’ Agenzia . Basta infatti richiamare i contenuti della   “CIRCOLARE N. 61/E del 2010, che cita :
Come anche precisato nella circolare n. 43/E del 10 ottobre 2009, sono da ritenere inesistenti in quanto interposte le seguenti tipologie di trust:

  • trust che il disponente (o il beneficiario) può far cessare liberamente in ogni momento, generalmente a proprio vantaggio o anche a vantaggio di terzi;
  • trust in cui il disponente è titolare del potere di designare in qualsiasi momento sé stesso come beneficiario;
  • trust in cui il disponente (o il beneficiario)risulti, dall’atto istitutivo ovvero da altri elementi di fatto, titolare di poteri in forza dell’atto istitutivo, in conseguenza dei quali il trustee, pur dotato di poteri discrezionali nella gestione ed amministrazione del trust, non può esercitarli senza il suo consenso;
  • trust in cui il disponente è titolare del potere di porre termine anticipatamente al trust, designando sé stesso e/o altri come beneficiari (cosiddetto “trust a termine”); 
  • trust in cui il beneficiario ha diritto di ricevere attribuzioni di patrimonio dal trustee;
  • trust in cui è previsto che il trustee debba tener conto delle indicazioni fornite dal disponente in relazione alla gestione del patrimonio e del reddito da questo generato; trust in cui il disponente può modificare nel corso della vita del trust i beneficiari;
  • trust in cui il disponente ha la facoltà di attribuire redditi e beni del trust o concedere prestiti a soggetti dallo stesso individuati; ogni altra ipotesi in cui potere gestionale e dispositivo del trustee, così come individuato dal regolamentodel trust o dalla legge, risulti in qualche modo limitato o anche semplicemente condizionato dalla volontà del disponente e/o dei beneficiari.”

Quindi, se ne puo’ concludere che la disponibilita’ di tali beni, pur non formalmente intestati al contribuente , va riportata nel quadro della dichiarazione.

Lo Studio e’ a disposizione per ogni chiarimento.

No special Tax regime for those who return in Italy to perform the same Job

For Taxpayers who return in Italy after a period abroad , there is no tax benefit in the presence of the same contract, same job and with the same employer. This was clarified by the Agenzia delle Entrate  with the response to ruling no. 42 of 18 January 2021.

If however the impatriate assumes a different corporate role than the original one, with a new contract that does not constitute a mere  the continuation of the previous work, the benefits will be granted.

Special attention should thus be paid for those contract terms  that could indicate a mere prosecution of the previous Job  , as :

– recognition of seniority from the date of first hiring;

– the absence of the trial period;

– clauses aimed at not paying the accrued thirteenth (and possibly fourteenth) accrued monthly salaries .

We are as usual here for any further assistance .

Necessary documents for your yearly Tax Return

Tax season is fast approaching, please find a list of the Documents we need to receive to prepare your Tax Return:

Mod. 730 or Mod. Unico of the previous year and payment forms F24.
Copy of your ID/passport and Tax ID Number ( Codice Fiscale )

Pharmacy receipts ( with your Codice Fiscale and paid by credit/debit card)
Invoices for specialist visits, health tickets Invoices / receipts for medicines and veterinary expenses
Funeral expenses

Loan interest paid ( we need the bank declaration )
CUD attesting your employment / retirement income
Copies of ENEA Certifications, for energy savings of 55% and 65%
Copy of renovation costs for recovery 50% plus deductions for Furniture and Appliances.
Payment for life insurance costs
Payment for school tuition costs

Expenses for sport activities for children up to the age of 18
Payments made to Onlus

Payment of social security contributions

Cadastral report for properties purchased during the year
Copies of any real estate purchases / sales occurred during the year
Contributions for domestic service workers
Copy of any foreign income tax returns and related tax payments
Value and description of assets / funds / equity investments / financial availability held abroad

That’s the general list. Please contact us for any doubt !