What is the reduction action in Italian succession?
To prevent anyone from circumventing the rights of legitimate heirs by gifting all or part of their assets while they are still alive, the law also provides for the possibility of exercising the reduction action against gifts, following the death of the donor (art. 555 of the Italian civil code).
In fact, to establish what assets belong to the legitimate heirs, the estate existing at the moment of death (relictum) is added to any gifts (donatum) made while the decedent was still alive. The forced quota is calculated on the total sum (relictum + donatum), and if the remaining assets do not suffice to satisfy the legal rights of the legitimate heirs, they may request the reduction of testamentary dispositions and gifts, starting with the most recent ones. As a result of the reduction action, the assets of the donations must be returned, in whole or in part, to the legitimate heirs, not only by the person who has received the gift, but also from any subsequent buyers of the assets in question.Read more
Inheritance tax varies by State and in this post we will see how it is calculated in Italy
When a person decides to transfer the ownership of a property to a family member by way of a Will, the former bears the immediate notarial costs of the instrument, while the latter pays any tax related to the act of inheriting a property. Inheritance tax varies by State and we will see how it is calculated in Italy, how it works, how much is paid on inherited assets. We will look at allowances, what percentage is inheritance tax, the mortgage and cadastral taxes and how the cost is calculated.Read more
If you die as a resident in Italy, Italian succession law will dictate how your worldwide movable assets (i.e. bank accounts, shareholdings, personal items etc) and Italian immovable assets (i.e. a property) will pass on your death.
If you are resident in another country, Italian law will only dictate how your Italian immovable assets pass on your death.
Whereas, English law, which is based on Common Law, allows you to leave your assets to whomever you choose, Italian law, which is based on Civil Law, does not give you complete testamentary freedom.Read more
Zes-Aas – 10 years tax-free for pensioners in Italy
Italian government plans 10 years tax-free for pensioners relocating to Sicily, Sardinia or Calabria
You may have heard that the Italian government is preparing to discuss a proposal to repopulate southern Italy and revitalise its economy? The proposal comes from Alberto Brambilla, pension expert and adviser to Deputy Prime Minister Salvini.
The plan would be to offer ten years tax-free for Italian and foreign retirees relocating their tax residence to Sicily, Sardinia or Calabria. Pensioners would be required to live in participating municipalities for at least six months and one day per year to qualify for the scheme. Sicily, Sardinia and Calabria would be the first three areas of southern Italy to pilot the project. Read more
Renouncing an Italian inheritance Is it possible to renounce an Italian inheritance? Receiving an Italian inheritance does not always represent an advantage. Due to important legal ramifications, it is a matter which you should carefully evaluate. Accepting an inheritance also implies becoming responsible for the decedent’s debts. Heirs, therefore, run the risk of paying off […]
In order to better understand information provided on the website, it is important to know the meaning of the terms and expressions in use.
– Chiamato all’eredità – Successor
He/she is the person who becomes entitled to inherit assets of the deceased person by virtue of any kind of applicable disposition (testamentary or legitimate succession).
– Denuncia di successione – Statement of succession
The Statement of succession needs to be filed by at least one entitled person within 12 months of death. It shall be filled out with all information and data concerning the deceased’s properties. Therefore it is important that it is drafted by a competent independent professional who will be also in the position to submit it to the competent Revenue Office.
– Diritto di precedenza – precedence by proximity
The principle of precedence by proximity of the degree of relationship means that the successor the most closely related to the deceased within the same line of successors – privileged collateral line or ordinary collateral line – excludes more distant relatives from the succession.
– Erede – Heir
He/she is the successor who has accepted the inheritance to which he/she is entitled.
– Legato – Legatee
A legatee is a physical person or legal entity receiving assets or money under the terms of a Will. The quality of legatee is acquired automatically without the need to be formally or tacitly accepted. He/she/it is not considered an heir, and does not have the same obligations towards the succession -for example in case of debts of the deceased.
– Successione legittima – Legal succession
A legal succession is a succession that is not ruled according to the deceased’s wishes as expressed in a Will, but follows rules of the Civil Code.
– Successione per rappresentazione – Succession by representation
In this case, the assets of the deceased, who died intestate, are transferred – also partially, to the descendants by representation. In this case, the entitled successor renounces the inheritance and the corresponding quota is divided into as many equal shares as the surviving descendants in the closest generation.
– Successione testamentaria – Testamentary succession
A testamentary succession is a succession that is ruled according to the deceased’s wishes as stated in a valid Will, drafted in compliance with the law.
– Testamento – Will
The deed through which a person, the testator, appoints one or more persons to manage his estate and provides for the transfer of his/her property at death.
If the deceased was resident in Italy, Italian Inheritance Tax (Imposta sulle Successioni) is applied to all the assets worldwide belonging to the deceased.
Otherwise in case of a non resident, the Italian Inheritance Tax rate is calculated on the assets located in Italy. It would be advisable to seek advice from specialized professionals, since Italy grants different international agreements, which prevent the double taxation of estates.
There are different rates which are applied to each heir according to the degree of kinship to the deceased. We can sum up the different rates in the following way:
- 4% to be paid for transfers to the surviving spouse and children, with an exemption of Euro 1,000,000 for each beneficiary
- 6% to be paid for transfers to brother and sisters of the deceased, with an exemption of Euro 100,000 for each beneficiary
- 6% to be paid for transfers to relatives within the fourth degree of relationship to the Deceased, and other relative on the spouse side up to the third degree (no exempt amount is available)
- 8% to be paid for transfers to any other (unrelated) parties.
Both rates and exemptions according to the current Italian inheritance tax regime are calculated over the whole net value of the assets included in the deceased’s estate. This amount is net of liabilities and all deductible expenses, such as debts of the deceased, medical and funeral expenses. The assets involved in the inheritance procedure are immovable properties, companies, shares/holdings, credits, money deposited in a bank account.
To sum up, a schematic table with all information concerning the current Italian inheritance tax regime:
|Degree of kinship||Exemption||Rate to be applied over the exceeding quota|
|Spouse or direct members of the family||Up to 1 million euro 4%||4%|
|Brothers and sisters||Up to 100.000 euro||6%|
|Family members up to the fourth degree of kinship, direct relatives and collateral relatives up to the third degree||No exemption||6%|
|In any case of inheritance of real estate property, the payment of a 3% (or € 168 as above described) registration tax is required|
It is also important to be aware that Italy has signed double taxation agreements with several countries (amongst others, the United Kingdom and the United States). To safeguard rights and to be sure of paying the correct amount according to the Italian inheritance tax regime, it is highly advisable to obtain professional expertise in the field of cross border inheritance matters.