WTI Magazine #75    2016 January 18
Author : Italian Notariat      Translation by:

 

The Guide entitled "Living and Doing Business in Italy" was created by the Italian Notariat to meet the needs of Italy's new economic scenarios and to inform foreign citizens about operations that in Italy by law require the intervention of a notary, who is a public official of the Italian Republic. To learn more, download the guide from www.notariato.it This is part 1 of 3

WHAT IS A NOTARY?
The notary is a public officer to whom the Italian State has entrusted the task of producing all deeds between living persons as well as last wills and testaments and endowing such documents with public trust.
In addition to family relationships, on which he or she is among the leading experts, and questions of succession, the notary is involved in many areas, including: real estate conveyancing (purchase and sale of homes, offices, land, warehouses, workshops, donations, subdivisions, mortgages etc.); important changes in company structure, whether it be a one-person firm or a corporate entity (constitution and winding up, amendments to the bylaws of the company, sale and leasing of businesses, etc.).

The Italian notary is subject to stringent checks by the State that help further increase the safety of the client for whom he performs work. All notarial deeds, in fact, are subject to periodic inspection by the Department of Taxation (every four months) and the Ministry of Justice (every two years), to verify that the correct amount of tax has been paid and that the deeds comply with the law.

Notarial District Councils, on the other hand, oversee the notary's professional conduct. Should irregularities be detected, the notary undergoes disciplinary proceedings with possible penalties; these are entrusted to independent regional disciplinary commissions presided over by a magistrate. This ensures the absolute impartiality of any decisions.

On behalf of the State, the Italian notary collects the taxes linked to all deeds (registration tax, mortgage and cadastral taxes, etc.). Each year through its online network the notarial system pays in several billion euros of indirect taxes and capital gains without charging the State any commission, even if the client does not pay what is due.

The Notarised Public Deed
The notary confers public trust, i.e. the status of legal proof, to the deeds he draws up. So everyone - including the courts – must accept as true what he has attested, unless the crime of forgery is established.
For this reason, the notary must personally determine what the intentions are of those persons who engage him and the goal to be achieved, in order to prepare the deed, in accordance with the law, in the most suitable and economical manner. To this end provision of the notary's advice prior to the signing of the deed is essential.

Guarantees Regarding Deeds
In performing his function the notary must, by law, be independent and impartial: he must protect the interests of all parties equally, regardless of who has appointed him. He must, therefore, decline to act whenever there is a conflict of interest (for example, when his own relatives are parties to a transaction).
The notary performs a prior check on legality: he has a duty to ensure the laws are respected and cannot and must not produce deeds in contravention of the law. Before drawing up a deed, the notary must determine who the parties are that have come to him and must certify their identity.

The notary also has the duty to ensure that the parties have the right to enter into the transaction. With particular reference to persons who are legally incapable and legal entities, the notary must be sure that the person before him has lawful power of attorney and that all relevant authorisations necessary for the completion of the transaction are in place.

The notary is required to verify the conformity of the intent declared to him with the rules of the legal system, and not only of the Italian legal system. In the event that a case has foreign implications, the notary must identify the law applicable to the case according to the rules of private international law and must evaluate whether the intention of the parties is in accordance with the applicable rules.

Anti-money-laundering controls
Under the law on money laundering, the notary must ensure the identification of clients and the beneficial owner of the operation and report any suspicious transactions to the FIU (Financial Intelligence Unit) at the Bank of Italy. According to data provided by the Financial Intelligence Unit (FIU), about 90% of the suspicious transaction reports received from professionals come from notaries. This helps demonstrate how the notary is not only at the service of the public but also assists the authorities in checks on legality.

The Language of Legal Documents
The law requires that deeds be written in Italian. But when the parties declare that they do not know the Italian language, the deed may be written in a foreign language, so long as that language is known by the notary.

The text in a foreign language will be accompanied by an Italian translation. If the notary does not understand the foreign language used by the parties, it will still be possible to draw up the deed in the presence of an interpreter chosen by the parties. In this last case, the deed will be written in Italian, but will be accompanied by the translation prepared by the interpreter in the foreign language. In this way, foreigners too may enjoy the benefits of transactions sealed by a notarial deed.

The deed and any translation into a foreign language, must then be read out to the parties by the notary, if necessary with the help of the interpreter. Thus the parties will be able to check that the notary has correctly represented their intentions in the public document before signing it.

Registration and Storage of Notarial Deeds
Following the signing of a deed, the notary will lodge it with the appropriate public registries: land, companies, civil status, etc. Registration of notarial documents is therefore not a burden on the parties but is a clear obligation of the notary. Thanks to this task entrusted by law to the notary, the public registers of the Italian State are complete, reliable and up to date in near real time. The notary is responsible for the filing and preservation of the deeds he has drawn up so they do not run the risk of being lost. Only in specific cases provided for by law may the notary deliver the original to the parties. It is also incumbent on the notary to issue certified copies to those requesting them. The law assigns to such copies the same value as the originals.

The preservation of notarial deeds is assured even after the notary who created them ceases his professional activity. The deeds are then delivered to the Notarial Archive, a facility of the Ministry of Justice of the Italian State, which will ensure their preservation and issue certified copies.

RESPONSIBILITIES OF THE NOTARY
For his work the notary, as a public official, must adhere to strict rules laid down in the code of ethics and the law to ensure, amongst other things, that:
-notarial deeds are in accordance with the will of the parties;

-notarial deeds are valid, meaning in compliance with the law;

-the legal effects of deeds are not affected by any encumbrances or rights of third parties (such as mortgages, foreclosures, easements, pre-emption, etc.) about which the notary did not warn the parties.

If the notary fails to perform his professional duties he is responsible under the law in several cases:
- civil: if he has caused damage to the parties through non-performance of his professional duties, the notary is obliged to make good the damage;

- criminal: if he has committed crimes;

- disciplinary: if he has violated the ethical standards of the profession, the notary must pay pecuniary fines or be suspended from the profession for a specified period of time or, in serious cases, he may be struck off.

In view of these responsibilities, notaries were the first profession in Italy to have set up, as early as 1999, compulsory insurance that by law covers every notary in the case of civil liability for error. There is also a guarantee fund for damages resulting from criminal offences.

So a member of the public, whether Italian or foreign, who enters the office of a notary public knows that he or she can count on protection both in the case of error as well as in the case of malpractice, and that without exception.

RIGHTS AND DUTIES OF THE CLIENT
What are the rights of the client?
1) To receive an estimate of the cost of the deed, with an indication of the individual expenditure items (taxes, fees and VAT);

2) to be received and heard directly by a notary before the execution of the deed in order to submit special needs or seek clarification of any kind;

3) a full reading of the deed with all necessary explanation;

4) to receive a full explanation in simple and understandable terms of all the tax implications, including those in the future;

5) absolute confidentiality of the notary and his staff about decisions taken and the information communicated.

Are there also duties? Not so much duties as "instructions for use":
1) Do not request deeds that are contrary to the law or intended to circumvent it;

2) Explain all the problems involved in the case without hesitation. Often the assets being discussed with the notary involve family and personal situations that it is appropriate to present to the notary in order to avoid a situation where the deed does not achieve the desired objective. Do not be afraid to bring out all aspects of the case;

3) Pay close attention during the reading and explanation of the act; that way, it will be easier for the notary to illustrate every aspect and correct any inaccuracies, even those simply relating to personal data.

The Choice of Notary
A notary is a bit like a doctor: one protects your assets, the other your health. The notary must be chosen by the parties by mutual agreement or, failing that, by the party who is obliged to pay the costs. The choice is personal and must not be imposed by other professionals.

It is possible to visit the official website of the Notariat (www.notariato.it) to search for a notary close to your residence. You should choose the notary on the basis of a trusting relationship, taking into account the time that the notary personally dedicates to the client; his ability to advise and guide you towards the solution that best achieves the interests of the parties; the way in which he practises the profession and observes the rules of law and the code of ethics; his fairness and professional capabilities, as well as the efficiency of his office staff.

THE LEGAL STATUS OF FOREIGNERS IN ITALY
The notary, when he is called upon to act in relation to public documents or authenticated private documents involving one or more parties who are not Italian citizens, applies a set of rules - known under the overall name of the legal status of foreigners – which define the limits, now quite broad, under which foreign nationals may enter into legal transactions in Italy.

The legal status of foreigners in Italy finds its primary and fundamental regulation in the Italian Constitution, which states that it is governed by law in accordance with international rules and treaties.
With particular regard to international sources, Italy's membership of the European Union means that the citizens of EU Member States enjoy in Italy the fundamental freedoms laid down by the European legal system, namely the free movement of capital, the free movement of goods, the freedom to establish economic activities in Italy and to provide services in Italy and the free movement of workers. Based on these freedoms guaranteed by European citizenship, citizens of EU Member States can carry out in Italy, under the same conditions as Italian nationals, all legal acts such as, for example, the purchase of a property or a business, the entering into of a loan agreement or the setting up of a company.

Citizens of countries that are not part of the European Union - and except as will be discussed shortly for non-EU citizens legally residing in Italy - may enter into transactions with legal validity in Italy only if the condition of reciprocity exists, i.e. only to the extent that it would be possible for an Italian citizen to undertake those same legal steps in the State of the foreign national who intends to operate in Italy. The condition of reciprocity can be met by means of one of the many international conventions stipulated by Italy with many foreign countries for the mutual protection of investments by nationals of the contracting nations. Proof of the existence or otherwise of the condition of reciprocity in relation to acts for which the notary's services have been requested is entrusted to the notary himself and involves an analysis that must necessarily be conducted on a case by case basis – if necessary with the help of the Italian Ministry of Foreign Affairs - since its outcome depends on the specific type of legal transaction involved as well as the national law of the person who is proposing it.

Apart from the fulfilment or otherwise of the condition of reciprocity, citizens of states which are not EU members but who are residing in Italy may enter into legal transactions if their stay in Italy is legitimate under national law. This condition requires the possession of a valid residency permit or a long-term residency permit, documents which must be shown to the notary prior to the formalization of the transaction in question.

The possibility for foreign nationals to carry out certain legal activities in Italy having been ascertained under the conditions outlined above, it should nevertheless be noted that the deed in question, even though notarised or authenticated by an Italian notary, will not necessarily be governed by Italian law. The Italian system of private international law – i.e. the system of rules that allows for identification of the jurisdiction and the law applicable in particular legal situations having transnational characteristics - is, in fact, strongly oriented toward openness to foreign legal systems with which such cases may have connections. Italian law and some European Regulations that uniformly govern certain cases of private international law in fact identify a series of connecting factors, depending on the criteria, so that from time to time Italian law may be applicable or instead the foreign law identified by the connecting factor; in some cases, the choice of legal system may be made by the parties to the transaction.

For example, with regard to the major issues, it may be pointed out that, according to Italian law:
- Personal relations between spouses are regulated by the common national law of the spouses or, failing that, by the law of the state where the marriage is predominantly located;

- Property relationships between spouses are governed by the law which regulates their personal relationships (unless the spouses agree in writing to regulate their assets according to the law of the State of which at least one of them is a national or in which at least one of them resides);

- Contractual obligations are, however, regulated in accordance with the Rome Convention of 1980 which, in addition to providing for a number of connecting factors according to the circumstances involved, allows the parties - except in limited cases – to freely choose an applicable law, even if without any connection with the contract;

Companies, associations, foundations and any other entities, public or private, even if they do not have the the character of an association, are regulated - as a rule – by the law of the State in which the entity was set up.

With regard to foreign spouses, who may be of different nationalities, it is useful to check with the notary to find the most satisfactory solution for their future succession in case of death or for the needs of their children.

REQUIREMENTS FOR DOCUMENTS FROM ABROAD AND FOR USE ABROAD
In general, for documents originating in a foreign country to be valid in Italy it is necessary, as in most legal systems, that they undergo a process of recognition and validation by the Italian diplomatic and consular authorities abroad: this is called "legalisation", whereby those authorities certify that the document in question was lawfully produced in its State of origin and its content is therefore reliable.

Given that legalisation is a procedure that involves an expenditure of time and resources that is hardly compatible with the requirements of modern commerce, most countries in the world - including Italy - have signed the Hague Convention of 5 October 1961 regarding the abolition of legalisation of foreign public documents.

This Convention means signatory nations have allowed legalisation to be replaced, as regards documents from another signatory nation, by the appending of an Apostille, rendering the document valid in the foreign country. The Apostille is an attestation, prepared in accordance with a standard required by the Hague Convention, as to the legal qualification of the public official (or functionary) who has signed the document and the authenticity of his or her seal or stamp.

This method means that a foreign national in possession of a document requiring validity in Italy can go to the authorities of the State in which it was issued - and a list of the appropriate authorities for each country is contained in the act of accession to the Convention itself - to have the apostille appended, thus making the document legally enforceable in Italy.

The national authority designated by Italy for issuing apostilles for Italian documents to be used abroad is the public prosecutor's office for notarial deeds, for court documents and for those regarding civil status, while for administrative acts the competent office is the Prefecture (Territorial Government office) of the place where the document was issued.