Inheritance tax in Italy is relatively low compared to other countries and there are a number of allowances which mean that in many cases there won’t be any Italian inheritance tax to pay when inheriting an Italian estate.
If you are dealing with an estate where there are assets located in Italy there are however some things you will need to know about Italian inheritance tax and some other relevant taxes to be aware of.
We have provided answers to some frequently asked questions about Italian Inheritance tax below.
Is there inheritance Tax in Italy?
Yes there is inheritance tax in Italy. It’s known as Imposta di successione.
If you are inheriting property in Italy, there may also be Italian property transfer taxes to pay upon the property title being transferred to the beneficiary.
Who pays inheritance tax in Italy?
In Italy each beneficiary pays their own inheritance tax. How much tax is payable by each beneficiary depends on a number of different factors, including:
- the amount of inheritance received by each beneficiary
- the relationship of the beneficiaries to the deceased person; and
- whether the deceased was resident in Italy.
What is the rate of Inheritance Tax in Italy?
The rate of Italian inheritance tax is different depending on the relationship of the beneficiary to the deceased person.
Surviving spouses (husband/ wife), children and parents of the deceased have an Italian ‘nil rate band’ or ‘tax free allowance’ of Euro 1 million. Therefore spouses, children and parents can each inherit up to €1,000,000 before any tax would be due. Any inheritance received above this amount is subject to inheritance tax at 4% (so just the amount in excess of €1million).
Brothers and sisters of the deceased can inherit Euro 100,000.00 before any Italian inheritance tax is paid. Any amount received over this €100,000 tax free allowance is subject to Italian inheritance tax at a rate of 6%.
Other relatives up to the fourth degree of kinship (this includes grandchildren, great-grandchildren, grandparents, great-grandparents, first cousins, nieces/ nephews, great nieces / nephews, aunts/ uncles, and great aunts and uncles) have no tax free allowance and have to pay 6% Italian inheritance tax on the total value of the inheritance received.
Everyone else ie non-related people or more distant relatives pay 8% tax on the full amount of the inheritance received (they have no tax free allowance).
Where the deceased was resident in Italy at the time of death, the tax will be calculated on the value of all assets worldwide (not just those located in Italy).
If the deceased was not resident in Italy when they died, Italian inheritance tax is calculated on the value of the assets located in Italy only.
|Beneficiary||Italian Inheritance Tax
(Tax free Allowance)
|Italian Inheritance Tax Rate
Imposta di successione
|Husband/ wife, children, parents of deceased||€ 1 million for each beneficiary||4% on the amount exceeding €1million for each beneficiary|
|Siblings of deceased||€ 100,000 for each beneficiary||6% on the amount exceeding €100,000 for each beneficiary|
|Grandparents, grandchildren, aunts/ uncles, nieces/ nephews, first cousins of deceased||6% No allowance||6% of total value of inheritance|
|More distant relative/ Unrelated person||No allowance||8% of total value of inheritance|
Are there any other taxes payable on death in Italy
As mentioned above, where property is being inherited, property taxes Imposta ipotecaria (the translation is ‘mortgage tax’ but may apply even where there is no mortgage) and Imposta catastale (cadastral tax) may be charged. The combined charge is 3% of the ‘cadastral’ value of the property (the cadastral value is the registered value of the property and may not necessarily be the same of the market value of the property- typically this value is lower that the market value).
There are a number of reliefs and exemptions which can reduce the amount of this tax payable, depending on who is inheriting the property and what it will be used for.
Inheritance tax from other countries
If the deceased died domiciled and / or resident in another country (i.e not Italy), inheritance taxes from that other country may apply to the assets in Italy in addition to Italian inheritance tax.
For example, if the deceased died domiciled in the UK, UK inheritance tax will be calculated on the deceased’s worldwide assets, including the assets located in Italy. This may result in double taxation it both UK and Italian inheritance tax is due on the Italian assets. There are reliefs available in respect of any double taxation.
If you are dealing with a deceased estate where there are assets in Italy, it will usually be necessary to seek assistance from an Italian lawyer to ensure that the Italian inheritance is dealt with properly, any taxes paid and the assets transferred to the appropriate beneficiaries.
What is the deadline for payment of Italian inheritance tax?
Italian inheritance tax should be paid within one year of the date of death.
Although Italian Inheritance Tax is not always be payable, in most cases it is still usually necessary to lodge an Italian Inheritance tax Return (Dichiarazione di Successione) within one year of the date of death.
Any Italian inheritance taxes are paid at this time to the Italian Tax authority (Agenzia delle Entrate). Once inheritance tax has been paid, the Italian assets can then be released to the beneficiaries.
If you need assistance from an English-speaking Italian lawyer in relation to the inheritance of an Italian property or other assets in Italy such as bank accounts or investments etc, please do not hesitate to contact us on 01244 470339 or at email@example.com.