Article 21 subsections 47 to 54, of the decreto legge (law decree) no. 262 of 2006, as amended by law no. 286 of 2006, restored the estate tax (tassa di successione). Law no. 383 of 2001 had abolished this tax.

Therefore the Italian estate tax applies to successions opened (meaning, the dates people passed away) before October 25, 2001 and from October 3, 2006 onward.

Article 2, subsection 48, of the above-mentioned law, amended as above, states that heirs and legatees, even if residing overseas, are required to pay the estate tax as per the following rates, with exemptions up to the values indicated in the second column below:

Beneficiaries Exemption (for each beneficiary) up to Rate
Spouse and relatives in the direct line (i.e., parents, children, grandchildren, etc.) EUR 1,000,000.00 4%
Spouse and relatives in direct line with severe disability as per Italian law no. 104 of 1992 EUR 1,500,000.00 4%
Siblings EUR 100,000.00 6%
Siblings with severe disability as per Italian law no. 104 of 1992 EUR 1,500,000.00 6%
Other relatives up to the forth degree of kinship and affines (i.e., relatives of spouse) in the direct line, and in the collateral line up to the third degree no exemption 6%
Other relatives up to the forth degree of kinship and affines in the direct line, and in the collateral line up to the third degree, with severe disability as per Italian law no. 104 of 1992 EUR 1,500,000.00 6%
Other individuals no exemption 8%
Other individuals, with severe disability as per Italian law no. 104 of 1992 EUR 1,500,000.00 8%

When an exemption applies, it applies for each heir. For example, in case of two heirs (let’s say, spouse and one child without disability) the exemption applies up to 2,000,000.00 €. Therefore, the 4% estate tax applies to the value exceeding such amount.

The Italian estate tax also applies to donations.

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To what does Italian estate tax apply?

It applies to all inheritance and donation goods and rights.

For example:

  • Ownership and rights of use on real estate properties. In reference to this, heirs are also required to pay property transfer taxes (i.e., imposta ipotecaria and imposta catastale, together indicated as imposte ipocatastali) for a fixed total 3% rate, without exemptions, apart from cases when benefici prima casa (first home benefits) apply. In the last case, property transfer taxes are equal to a total amount of EUR 400.00.
  • Cash funds;
  • Credits, including those from bank accounts and deposits;
  • Italian and foreign financial instruments;
  • Derivate contracts;
  • Contents of safe deposit boxes;
  • Jewels.

Pursuant to article 12, subsection 1, letters h) and i) of decreto legislativo (legislative decree) no. 346 of 1990, also known as TUS (Testo Unico delle Successioni e donazioni), the following assets are exempt from Italian estate taxes:

  • Italian public debt securities;
  • Foreign public debt securities and other government securities, if issued by members of European Union and of the European Economic Area;
  • Insurance compensation in name of the heirs, even if stipulated by the deceased (e.g., life insurance);
  • Funds transferred to Italian public entities and to foundations and associations legally recognized to have public utility (e.g., nonprofit organizations, political parties).

The estate tax applies to the net value of the estate, which one calculates by subtracting the total amount of deductible inheritance liabilities from the total value of the assets at the time of death.

The value of assets and liabilities are determined according to criteria set out in the TUS.

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What if the person resided abroad at the time of his/her death?

Pursuant to articles 1 and 2 of the TUS, the Italian estate tax applies to all inheritance assets and rights, even if they are abroad, in cases where the person resided in Italy at the time of his/her death.

Conversely, if at the time of death the person did not reside in Italy, the estate tax shall apply only to inheritance assets and rights in Italy.

Consequently, no matter where the person and his/her heirs reside at the time of death, the estate tax applies (apart from cases of double taxation) for financial instruments issued by Italian credit institutions.

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