Some assets are not subject to inheritance tax at all, such as. Β Italian government bonds and life insurance. Siblings have an allowance of 100,000 euros, after which they have to pay inheritance tax at six percent. Family members up to the fourth level of kinship and other relatives of blood, marriage or adoptive up to the third degree of kinship pay six percent, without exemption. All others are obliged to pay eight per cent, without exemption. Inheritance tax (Imposta di Successione) applies to the total net value of the estate, including fixed and non-fixed assets. The rate of this tax varies according to the relationship between the beneficiary and the deceased: therefore, for the inheritance of a brother or sister, if the value of the inheritance is less than 100,000 euros, there is no inheritance tax, but only real estate transfer tax. If the value of the inherited property (or the real estate share) is less than 1 million euros, the inheritance is subject to only 3% of real estate transfer tax. If the heir resides in the property, the total taxes applicable to the estate are 400 euros.
This new successor European regulation was introduced with the aim of simplifying cross-border succession. However, it has no influence on the Italian inheritance tax still payable by non-residents on property located in Italy. Estate planning measures must follow well-planned strategies in order to always have the desired effect in the event of a change in Italian inheritance law. Options can include a potential beneficiary in the title deed at the time of buying a property in Italy. You, as an investor in the property, may have a lifetime interest in it, while the beneficiary has the remaining interest. This results in an automatic transfer of full ownership to your beneficiary upon your death. Inheritance tax applies to the entire net worth of the estate, including movable and immovable property. Prices depend on the beneficiary`s relationship with the deceased: if you have already purchased your property, there may be other structures that help minimize taxes. It goes without saying that competent advice at the highest level from Italian estate lawyers who speak fluent English with an exceptional technical understanding of the different legal options available to you and their suitability for your individual situation is crucial. If an estate includes a business or a significant stake in a business, these assets will not be taxed if they are passed on to the children of the deceased, provided that the children continue the business or take control of the business for at least five years. In the case of non-residents, Italian inheritance tax remains due, but is calculated only on the basis of assets located in Italy. There are various cross-border agreements, including with the UK, that prevent double taxation of inheritances, which is why it`s so important to have expert assistance from an experienced specialist in cross-border inheritance law to ensure that your beneficiaries don`t pay more tax than necessary.
Beneficiaries of assets residing in Italy must receive an Italian inheritance allowance (Dichiarazione di Successione) so that the assets can be made available to them. This must be done within one year of the date of death. Once the application is completed, the application is sent to the Italian tax administration, after which the beneficiaries are asked to pay the Italian inheritance tax due. The assets of the estate can only be distributed once the tax has been paid. Our English-speaking and French lawyers have extensive experience in cross-border succession matters. – 4 % of the total value of the estate in the event of a transfer to a spouse or direct relatives, with the exception of shares in the estate of less than EUR 1 million; It is a tax that residents of Italy must pay under certain conditions, which are described below when they inherit property, both immovable and movable, wherever this inheritance is located (therefore also on assets held abroad). Finally, we must draw attention to the fact that in the case of assets with a value of more than EUR 100 000 or, in any case, in the case of immovable property (regardless of its value) that has succeeded each other in Italy, a specific declaration of succession must be submitted. It is advisable to contact specialized professionals for this requirement. Inheritance tax in Italy is certainly very “generous” compared to what happens in other countries. For this reason, there have been discussions in Italy for several years about a revision of this tax, which provides for an increase.
In this sense, legislative proposals to increase tax rates and reduce inheritance tax exemptions have been encouraged. At present, however, the taxation applicable in Italy to inheritances is that described in this article. In the UK, inheritance law offers flexibility in that you can transfer your estate to whomever you want. However, this testamentary freedom does not exist under Italian inheritance law. Italy has a very low inheritance tax rate compared to most countries. While Japan tops the rankings with a rate of 55% and the US and UK just under 40%, Italy only needs 4% of inherited wealth for beneficiaries in the first degree of relationship. There are fifteen countries belonging to the Organisation for Economic Co-operation and Development (OECD) that do not levy inheritance taxes, and “thirteen countries or jurisdictions have waived their inheritance or inheritance taxes since 2000” (Tax Foundation). The international law firm Arnone&Sicomo supports Italian and non-Italian people who have inherited real estate or assets in Italy. Other discounts may apply in other cases, for example. B if an inheritance includes property from a previous estate. In this case, it may be possible to deduct from the inheritance tax due for the second estate part of the taxes paid for the previous estate and save up to 50%.
Not everything is taxable under Italian inheritance law. Real estate, private bonds, shares or equity of a non-family business, funds under management, fiduciary assets, savings and bank accounts, jewellery and furniture are taxable assets. However, unit-linked life insurance, government bonds and shares or shares of a family business are not. For those who have fixed assets such as land or real estate in Italy, or for foreigners who have made Italy their permanent residence, it is good to make an Italian will. Although a British will is valid in Italy, it would need to be certified by an Italian notary before the estate could be continued. Many challenges can and will arise in the processing of foreign language wills and all related documents must be officially translated into Italian. The cost of this is usually higher than making an Italian will. As we have already said, in cases where inheritance tax is due in Italy, assets held abroad must also be calculated. In this case, it is likely that assets located abroad will most likely also be subject to inheritance tax in the country where these assets are located.
In this case, there is therefore a risk that a double taxation hypothesis will be established. Under Italian law, if inheritance tax was levied on the same property abroad, this foreign tax can be deducted from the tax due in Italy. In addition, Italy has signed bilateral agreements on the elimination of double taxation in inheritance with Denmark, France, the United Kingdom, Greece, Israel, sweden and the United States of America. – those who are entitled to temporary possession of the estate of the deceased. In addition, having an Italian will could lead to a reduction in liability for Italian inheritance tax, reduce the likelihood of disputes between beneficiaries and make it clear to the Italian authorities how you want to bequeath your assets. Italian law states that when a person dies, some family members have the right to inherit part of their estate. The law on “forced inheritance” applies if there is no will or if a will is declared invalid, and unless otherwise stated in an Italian will, this law also applies. However, in August 2015, the European Commission`s new regulations meant that non-Italian residents, if they were citizens of EU member states, could stipulate in their Italian will that their fixed assets should be treated in accordance with the law of their own country. We have compiled the following information to help you find your way among the most frequently asked questions about Italian inheritance tax and inheritance, and of course, we are at your disposal in person if you need help in a particular area. Italian inheritance tax is a tax payable by an heir when he receives money or real estate from the estate of a deceased person. As is customary in Italian law, inheritance tax laws have been amended several times in recent years and further changes in the near future cannot be excluded. Italian inheritance law stipulates that when beneficiaries inherit an estate, they are not only entitled to the assets of that estate, but are also liable for the debts and liabilities of the deceased.
If these debts and liabilities exceed the assets, the beneficiaries can reject the estate in its entirety. Italian inheritance tax applies not only to the property of Italian citizens, but also to all property of foreign citizens in Italy and abroad if they are tax residents in Italy at the time of their death. .