According to the Italian Civil Code, when executing an undertaking, ”the obligor has to exercise the care of a good family father (buon padre di famiglia)“, art. 1176 Italian Civil Code. As we assume all Italian family fathers are good fathers too, we should not need to worry when doing business in Italy.
Nevertheless, we would like to point out some peculiarities of the Italian Law. The following is not an exhaustive list of all legal pitfalls but has the sole purpose of giving you some examples of where additional attention needs to be paid:
Example 1: Real Estate
The preliminary contract regarding the acquisition of real estate, called „preliminare“ or „compromesso“, is valid in writing according to Italian Law; i.e. notarization is not necessary for its validity.
The execution of the preliminary contract does not change the ownership of the real estate. The purpose of the preliminary contract is to give both parties – under certain conditions – the possibility of claiming the change of ownership at the notary.
The buyer of the real estate usually makes a down payment when signing the preliminary contract. The buyer needs to know that he can lose the down payment if he does not respect the provisions of the preliminary contract. The vendor on the other hand risks having to pay double the down payment to the buyer in the event that he does not adhere to the contract.
Example 2: Employment
At the termination of an employment contract, the employee receives a severance payment (trattamento di fine rapporto). It is calculated roughly with 1 month’s salary per year of service. Hence it is necessary to set aside reserves or to open a dedicated fund.
Example 3: Inheritance Law
The heritage needs to be published (pubblicazione) by a notary in order to become executable under Italian Law.
Example 4: Ownership of Real Estate
It is important to know that the Italian Law recognizes malicious usucapion (usucapione). Anyone living in the property for more than 20 years can claim change of ownership of the property even though he knew that he was not the rightful owner or entitled to claim ownership in the first place.
Example 5: Real Estate Tax (IMU = Imposta Municipale Unica)
IMU replaces the former ICI. The Italian Real Estate Tax is calculated every year. The Owner of the property does not receive a letter communicating the current amount owed or the due date but has to gather the information himself – an accountant can be of help here.
Example 6: Title retention
Title retention (riserva di proprietà) regarding machines with a value higher than 15 euros needs to be registered in the relevant register in order to be valid versus third parties.
Example 7: Penalty
According to Italian Law a judge may reduce a penalty he deems too high although both parties have agreed otherwise.
Example 8: Mutual agreement
If Court litigation is ended by means of a mutual agreement, the parties are both joint debtors of the accrued lawyers costs unless the agreement stipulates otherwise. This is why the plaintiff may be forced to pay the lawyer of the respondent even though a mutual agreement has been reached.
Example 9: Contract clauses
Certain clauses of a contract (clausole vessatorie) such as:
- choice of forum and applicable law
- penalty clause
- withdrawal rights etc.
need a separate signature in order to become valid (doppia firma).
Example 10: Terms and Conditions
German entrepreneurs should always make sure that they explicitly agree on their general terms and conditions when doing business in Italy and/or across borders generally. It is usually not sufficient to make them accessible to the public on the own web-page or to allude to the General Terms and Conditions on the written confirmation of the order. It is advisable to include a sentence referring to the T&C in the agreement which will be signed by both parties.
Example 11: Formal registration
According to Italian law, a number of contracts such as
- sales contracts concerning real estate, cars, boats and yachts
- most renting contracts
need to be formally registered (registrazione) and are subject to registry tax.
Example 12: Certificates and contracts
According to Italian law a number of contracts/certificates need a „secure date“ (data certa). It is not sufficient to date the document, but the date needs to be proven by means of the above mentioned registration or by means of a postmark.
Example 13: Scontrino
Whenever leaving a bar, shop or restaurant in Italy, please remember to take the bill with you. Keep it while you are in the vicinity of the bar/shop. If you do not have the bill, fines up to 150 euros are possible. The shop owner will also get a significant fine and can additionally lose his concession.
Example 14: Cash payment
Please note that cash payments for amounts of more than 1,000 euros are no longer permitted.