Inheritance tax in Italy

Scope of application of the Italian Inheritance and Gift Tax Act

The regulations on Italian inheritance tax apply if

• the deceased is resident in Italy for tax purposes or
• the assets to be transferred are located in Italy

As the regulations on Italian inheritance tax change rapidly from time to time, the regulations at the time of the testator’s death are decisive.

Determination of the tax liability

Determination of the taxable acquisition

The first step is to determine what the acquirer has acquired from the deceased by reason of death and the amount of the enrichment. In the case of an heir located abroad, only the estate located in Italy is taxable in Italy.

Acquisition

The acquisition of the heir includes all rights and liabilities of the testator that do not expire upon death.

Important: If the deceased is survived by his or her spouse, a distinction must be made between the assets of the deceased and those of his or her spouse. Only the deceased’s assets are inherited and therefore taxed!

The acquisition of the legatee, on the other hand, only includes the object of the legacy (e.g. vacation property).

Inheritance tax amount and allowances

Inheritance tax percentages

Inheritance tax is based on the relationship between the heir and the deceased. Spouses and children are taxed at 4%. Relatives in the direct ascending line and collateral relatives are taxed at 6%. All other beneficiaries of the inheritance are taxed at 8%.

Allowances

The tax-free amounts also depend on the relationship of the heir to the testator. The allowances are as follows:

• Spouse, ancestors and children = 1,000,000.00 €
• Side relatives = 100.00,00 €
• Other = 0,00 €

There are special rules for disabled persons. They receive a flat-rate allowance of 1,500,000.00 € regardless of their relationship to the testator

Avoidance of double taxation through offsetting

If the acquirer or the testator was resident in Italy for tax purposes or if the estate includes assets in Italy, German inheritance tax may be payable in addition to Italian inheritance tax. In such cases, double taxation can often be avoided or mitigated by offsetting.

Explanation of the Italian inheritance tax

In the event that Italian inheritance tax applies to the inheritance, anyone who benefits or is burdened by it must submit a tax declaration (dichiarazione di successione) to the competent registry and tax office (Agenzua delle Entrate). Jurisdiction depends on the deceased’s last place of residence. If the deceased was resident abroad, the registry office in Rome (Roma 6) is responsible. The deadline for filing is 12 months.

The following documents must be submitted to the responsible office:

• Personal details of the deceased
• Death certificate (certificato di morte)
• Certificate of the deceased’s marital status (certificato di stato di famiglia)
• Certified copy of the will
• Substitute declaration for the notarial deed in the case of legal succession
• List of the deceased’s assets and liabilities
• Separate statement from the bank about the account balance
• If a property exists, an extract from the cadastral register
• List of surviving dependants with Italian tax code (codice fiscale)

These documents can be sent electronically to the relevant office. The submission of the above documents does not lead to acceptance of the inheritance.

Special taxation of real estate

Application to Italian real estate

The following taxes only apply to real estate located in Italy and belonging to the estate.

Type of taxation

In addition to inheritance tax or gift tax, the following additional taxes apply to real estate:

• Transfer tax (imposta ipotecaria)
• Cadastral tax (imposta catstale)
• Register tax (imposta di registro)
• Value added tax (imposta sul valore aggiunto IVA)
• Mortgage tax (imposta ipotecaria)
• Real estate transfer tax (imposta sugli acquisti immobiliari)

Amount of taxation

The amount of taxation depends on several factors, but primarily on whether the property is purchased as a primary or secondary residence. 

When purchasing the property as a second home, the following taxes apply:

• Transfer tax
  • Purchase by a private individual 50 €
  • Acquisition by a company 200 €.
• Cadastral tax
  • 1% of the cadastral value
• Real estate transfer tax
  • Cadastral value multiplied by 126
• Register tax
  • For the acquisition of a company 200 €
  • If purchased from a private individual, 9% of the cadastral value (min. 1,000 €)
  • When purchasing a luxury property from a private individual, 15% of the cadastral value (min. 1,000 €)
• Value added tax
  • Purchase from a private individual 0 €
  • Acquisition of a company 10% of the purchase price
  • Purchase of a luxury property 22%
• Mortgage tax 2 % of the cadastral value

The following tax rates apply to purchases as a primary residence:

• Transfer tax
  • Purchase by a private individual 50 €
  • Acquisition by a company 200 €
• Cadastral tax
  • Purchase by a private individual 50 €
  • Acquisition by a company 200 €
• Real estate transfer tax
  • Cadastral value multiplied by 115.5
• Register tax
  • For the acquisition of a company 200 €
  • When purchasing from a private individual 2% of the cadastral value (min. 1,000 €)
• Value added tax
  • Purchase from a private individual € 0
  • Acquisition of a company 4% of the purchase price
• Mortgage tax
  • Purchase by a private individual 50 €
  • Acquisition by a company 200 €