2676 trust made in Italy

The Parliament has just approved a law that creates a new legal instrument considered as a real "trust made in Italy", called "destination legacy" (patrimonio di destinazione).
With this "trust" a person, with a public contract, can designate some assets (land, houses etc. or even movable assets, cars, ships, airplanes) to protect and achieve the interests of another person or institution, even for the whole life of the beneficiary.
These assets must be used only for the purposes established in the contract and can be distrained or mortgaged only for debts related to those purposes.
It is a very new law and it is pretty early to say more now (we notaries have to study it and....digest), but I think it will be very useful and...used in the future.
Here's the text of the law (sorry it's in italian, but i'm not able to translate it with the right accuracy, because of the legal terms)

2645-ter del codice civile, non ancora pubblicato in Gazzetta Ufficiale:

«Gli atti in forma pubblica con cui beni immobili o beni mobili iscritti in pubblici registri sono destinati, per un periodo non superiore a novanta anni o per la durata della vita della persona fisica beneficiaria, alla realizzazione di interessi meritevoli di tutela riferibili a persone con disabilità, a pubbliche amministrazioni, o ad altri enti o persone fisiche ai sensi dell'articolo 1322, secondo comma, possono essere trascritti al fine di rendere opponibile ai terzi il vincolo di destinazione; per la realizzazione di tali interessi può agire, oltre al conferente, qualsiasi interessato anche durante la vita del conferente stesso. I beni conferiti e i loro frutti possono essere impiegati solo per la realizzazione del fine di destinazione e possono costituire oggetto di esecuzione, salvo quanto previsto dall'articolo 2915, primo comma, solo per debiti contratti per tale scopo».

Category

Legal

Once you have studied this , do you think it will be useful to any of us forum menbers?

Trusts formed outside of Italy are in fact recognised by the Italian taxation system.

There is a system of precedents drawn from the regional taxation authorities as to the appropriate methods for taxing say income received in Italy from a trust resident outside.

This new law is probably an attempt to attract trust business but I wonder whether Italian system of civil law can cope with a legal concept very much born in common law jurisdications, most especially the UK and other similar legal systems.

I also wonder why someone would seek an Italian trust solution (charities etc, aside). Trusts are very useful vehicles where they are resident outside the country where the settlor and beneficiary are tax resident. It would be a mistake to form an Italian trust for tax mitigation where you were tax resident in Italy.

Much better to form one in the UK or a commonwealth country (NZ or Australia). That way the trustees and so the trust are resident in a another country. These countries will not tax trust income that does not derive from within their borders. They can accumulate income as capital which can then be passed to beneficiaries without tax in certain circumstances.

Italy has an all together different approach, and speaking purely as a cross border tax advisor, I doubt their new laws are designed to make such mitigations a possibility.