New rules came into force in Italy on 1st January 2025 aiming to simplify and clarify inheritance and gift tax and modernize estate planning rules (Decreto legislativo n. 139/2024 amending the Testo unico 346/1990).
These rules will apply where a person died resident in Italy or to a person who died leaving property in Italy.
Below is a summary of the main changes:
Self-assessment of inheritance and gift tax – Italian based assets
- Where a person died after 1st January 2025, or a deed of gift was signed after that date, the heirs or beneficiaries must calculate and pay inheritance or gift taxes themselves to the Agenzia delle Entrate, rather than waiting for the Italian tax authority to issue a notice. The tax must be paid within 90 days of the filing deadline.
- The Agenzia delle Entrate may notify the heirs within a deadline of 2 years if the calculation of inheritance tax was incorrect and state whether additional tax is payable.
- Where there is real estate property held by the deceased there will also be registration taxes due at the moment of filing a declaration of succession, in addition to inheritance tax. These are the “imposta catastale” – 1% of the valore catasatale and the “imposta ipotecaria” – 2% of the valore catastale. These “property-only” succession taxes can be differentiated from inheritance tax, the latter being based on the relationship of each beneficiary to the deaceased and which are applied to real estate as well as financial or non-property assets.
Electronic filing of declaration of succession
- The declaration of succession must be filed electronically (on the website of the Agenzia delle Entrate or via a professional Notary, accountant or lawyer using specialist software).
- Where heirs are non-resident the declaration can be compiled manually sent by recorded delivery mail to Italy.
Tax rates
- There is no change to the existing rates of inheritance or gift tax in Italy. Where the heir (or donee) is a spouse or a direct‐line descendant the rate of tax is 4% per person on any amount over the threshold of 1 million Euro.
- Siblings pay the rate of 6% on any amount over the threshold of 100.000 Euro per person.
- Other close relatives pay 6% without any threshold, and those heirs with no family relationship to the deceased pay 8%.
- From January 1st 2026, gifts and inheritance will be treated separately for calculating tax thresholds and exemptions. For example a child benefitting from the threshold of one million Euro and not being liable to payment of gift tax in receiving a donation, may also benefit from a separation one million Euro threshold on receipt of an inheritance (previously only one threshold per person was permitted). This enhances the tax planning flexibility for families who use lieftime transfers and inheritance planning in combination.
Trusts
- This is the first time that Trusts have been expressly addressed by Italian legislation in the context of inheritance or gift tax. Trusts are not governed by Italian law but are recognised in Italy as foreign law instruments.
- Transfers to trusts, or distributions from trusts to beneficiaries, are now expressly subject to inheritance/gift tax if they result in a “gratuitous enrichment of beneficiaries”.
- Taxpayers can themselves choose when to trigger the tax: either at the time assets are contributed into the trust (so tax is paid upfront), or when assets are actually distributed to beneficiaries.
- The new rules clarify that the tax is due on all assets transferred to a Trust where the settlor was resident in Italy at the time of the transfer.
Indirect and lifetime gifts
- The rules on “indirect gifts” (for example, a gift without a formal deed being drawn up, such as a parent paying for child’s property) have been clarified. The threshold for triggering taxation of indirect gifts has been eliminated (this was previously fixed at gifts over the amount of Euro 180.769), and the tax authority’s ability to assess these has been tightened.
- Lifetime gifts are no longer automatically assessed on death for inheritance tax calculations, so they should be declared for tax purposes at the time they are made.
Business transfers / company shares
- There are new incentives for generational transfers of business assets/shares: for example transfers to a spouse or descendants may be exempt from inheritance or gift tax if certain conditions are met (including an heir continuing the business for at least 5 years).
Penalties and procedural simplifications
- Penalties for failing to file within the deadline of 12 months from death have been reduced (from earlier higher percentages) to a fixed penalty equal to 120% of the inheritance tax due.
- Some simplifications for younger heirs have been introduced: e.g., sole heirs under 26 may access funds in the estate bank accounts to cover certain taxes (mortgage, land registry, stamp duty) before the inheritance declaration is filed.
The Agenzia delle Entrate has issued an official Circular n. 3 of April 16th 2025, containing guidance on the new rules.