ITALIAN INHERITANCE TAX
Based on the law n.383 of 18/10/2001, published in the official Gazzetta n. 248 on 24/10/2001, the taxes on inheritance and life-time gifts have been modified.
The new legislation is valid from 25/10/01 onward and concerns all inheritances and life-time gifts made after that date.
According to the new legislation inheritance tax will no longer be levied in the conventional way, and this regardless of the value of the bequeathed assets and the degree of relation ship with the deceased.
In cases of inheritance of real property (or title to real property), property transfer fees (referred to as imposte ipotecarie and catasto) respectively of 2% and 1% must be paid. Should it be the primary residential home ( prima casa, "first / main home" ), the property transfer fees are € 129.11 for each residence.
Regarding life-time gifts, the degree of kinship between the donor and the beneficiary is still relevant under the fiscal point of view.
In the case of gifts to the spouse or the donor`s immediate family (e.g. father-son, grandfather-grandson), or in case of a relationship to the 4th degree (uncle-nephew, cousins), inheritance tax will not be levied. Inheritance tax will be levied on life-time gifts to beneficiaries not related to the donor as described above, and on life-time gifts exeeding the value of € 180,759.91. ( Disabled poeple € 516,456). Should the beneficiary receive more than one gift this benefit / "exempt slice" can be applied only one, single time.
Values above the "exempt slice" are subject to other taxes: in this case the tax amount corresponds to the tax applied on the transfer of title to real property (e.g. transfer of title to real property registration tax 7%; for primary residence 3%.)
For gifts as well, after the transfer of the real property ( or title to real property ), the payment of the property transfer fees referred to as (imposte ipotecarie and catasto) respectively 2% and 1% must be fulfilled. In case of "first homes" € 129.11 per residence.
In both cases (inheritances and gifts), the tax exemption on the property transfer fees (referred to as imposta ipotecaria and catasto) remains valid for the aquisition of the "first home".
| Inheritance | Beneficiaries | Property transfer fees Ipotecarie and catastali |
| land and buildings | all | 3 % |
| first home | all | € 258.22 |
The new tax rates for:
| Gifts exceeding the value of € 180.759,91 | Registration tax | Transfer fees Ipotecarie e catastali |
| spouse and direct ancestors and descendants | - | 3% |
| Relatives up to the 4th degree and collateral relatives to the 3rd degree | - | 3% |
| Other objects: agricultural land non agricultural land buildings restricted buildings first home Real estate subject to "zoning"; areas restricted to certain uses |
15% 8% 7% 3% 3% 1% |
3% |
Each beneficiary must pay the taxes for his inherited share. Each heir and/or legatee enjoys an "exempt slice" equal to € 180,759.91, ( where a minor child or a disabled person is among the beneficiaries, their "exempt" slice is increased to € 516,456). No inheritance tax is payable on each inheritance per each single heir up to € 180,759.91.
This" exempt slice" is valid for the inheritances and life-time gifts made during the life time of the testator, and may be used/ accredited only once. If the testator had made a gift while he was alive, and in order to calculate the taxes the "exempt slice" had already been taken into account, the beneficiary cannot take advantage of the "exempt slice" during the inheritance procedure.
An optional "lifetime" payment of Italian Inheritance Tax ( which would otherwise be payable on death ) has been introduced, with reduced tax rates payable during the testator`s lifetime.
The percentage is one point lower than the corresponding tax rate on inheritance. The implied percentage rate is the same as the tax rate levied on life-time gifts.
The "property capital gains tax" called "INVIM", and a replacement tax which had been inroduced, have been abolished.
Evaluation of the bequeathed assets:
In order to calculate the inheritance tax, the value of the assets and funds of the bequeathed assets are being assessed as follows:
Currencies, jewels, and movable items are assessed an estimated value equal to 10% of the assets bequeathed to each single heir, with the deduction of the exempt rate established by law, and this, even if the bequeathed assets were not actually received. These assets may, however, be reduced to a lower value in the declaration of inheritance by means of a detailed inventory list compiled by a notary public or in the courtroom, and providing the necessary proof of the very same.
The Italian Inheritance Tax on real estate property is calculated based on the official, assessed value of land & property, "Local Land Registry value" (valore castale), and must be multiplied as follows:
- buildings of category A, B, C by 100 (excluding category A/10 and C/1);
- buildings of category A/10 and D by 50;
- buildings of category C/1 and E by 34.
Registry values/Assessed value of land & property (valori castali) are subject to an upcharge of 5 %, which must be taken into account when calculating its values.
Land value is assessed according to the official, local Land Registry ( catastro ), and must be multiplied by 75, with an upcharge (increase in value ) of 25%.
The current market value applies for commercial land.
Shares are subject to particular legislation. BOT and CCT remain tax free unless the Italian tax legislation should change.
Inheritances of companies, or shares in companies are no longer assessed based on their balance sheets, and therefore, may directly be transferred based on their book value.
Registration of the inheritance
An inheritance must be filed at the competent registration office within 6 months after the testator`s death, indicating the bequeathed assets and their values. This registration must be done by the heirs, the legatees, the special administrator, and the executor of the will, furthermore, persons in posession of bequeathed assets due to a longer absence or the suspected death of the heir. In case the inheritance has not been accepted yet, the registration must be done by the interested parties who have not rejected the inheritance yet. The registration must be done on official forms available at the registration office, and may be filled out by each beneficiary, or every single named beneficiary, or jointly by all beneficiaries.
Payment of the Inheritance Tax
Upon registration of the inheritance, the property transfer fees ( imposte ipotecarie and catastali ) for the bequeathed real property amounting to 3 % must already have been paid.
The same persons who registered the inheritance have to also calculate the payable amount of taxes. This so called "self-billing" of the property transfer fees is based on the assessed value of the land & property (valore catastale.)
The registration office then calculates the Inheritance Tax payable within 60 days after the receipt of the calculated accounting sheet.
When the heirs join together (comunione di eredi) every single heir receives a notice of the total amount of the Inheritance Tax due. Upon request, the registration office issues a detailed listing of the single applied tax rate.
It is possible to agree partial payments of the Inheritance Tax. In this case, a down payment of 20% of the total due amount is required and securities such as a bank warranty or a mortgage must be pledged.