A Quick guide to the Italian Inheritance Tax

Apr 11, 2024

Italian Inheritance tax is payable by the heirs, and it is calculated on the value of the estate net of debts and liabilities.

The inheritance tax rates are as follows:

• 4% of the value of the share in favour of the spouse, ascendant, and descendant up to the fourth degree, exceeding the individual threshold of 1,000,000 euros;

• 6% of the value of the share in favour of brothers and sisters, exceeding the individual threshold of 100,000 euros and for other relatives up to the fourth degree and in-laws up to the third degree without the application of the threshold;

• 8% of the value of the share with no threshold for other individuals. If the beneficiary is a severely disabled persons pursuant to law no. 104 of 1992, there is a threshold of 1.5 million euros.

When the estate includes companies and company shares, the transfer is not subject to inheritance tax if the heir holds control of the company for a period of no less than 5 years from the date of the opening of succession (therefore starting from the date of death).

If the succession involves immovable property, the inheritance tax payable is based on the cadastral value (obtained by multiplying the property’s cadastral income by a set coefficient that varies according to the category the property belongs to (i.e. residential house, garage, commercial property, office etc.).

The cadastral value of an immovable property is not the same as its current market value and it is significantly lower.

In this case, in addition to the inheritance tax, beneficiaries are also liable to pay:

1. cadastral taxes (1%) of the cadastral value of the inheritance share: it is calculated on 1% of the property value (with a minimum amount of €200.00).
2. mortgage taxes (2%) of the cadastral value of the inheritance share: it is calculated on 2% of the property value (with a minimum amount of €200.00)

Law 342/2000 provided the so-called ‘primary home’ (1) benefits to inheritances and donations, stating that in case of inherited or gifted properties the amount of both the cadastral and mortgage tax is fixed to EUR 200.00 regardless the value of the properties.

In addition to these mentioned taxes, especially in case of multiple properties inherited, other taxes – not directly linked only to the inheritance but legally required and related to the immovable properties owned – may be due.

For this reason, the assistance of a tax consultant it is advisable in order to have a complete overview of the amount of taxes to be paid.

Notes:

In Italy, a house is defined “primary home” (prima casa) when it is located within the jurisdiction where the buyer is registered as a resident or where he/she intends to transfer his/her residency within 18 months from the date of execution of the purchase agreement. The owner must not have other properties in Italy on which he/she has claimed the primary home benefits, and the property must not be registered as a luxury property.

This article was written by Sara Bocci and Caterina De Carolis

Check out our series of articles about “Navigating Italian Inheritance and Succession: A Comprehensive Guide”:

Part 1: All you need to know about the Italian inheritance Law and succession procedure

Part 2: A Quick guide to the Italian Inheritance Tax (this article)

Part 3: International succession and the applicable law(s)

Part 4: An overview on the International Conventions with USA, UK, Brazil and Australia

Part 5: How to search for a Will in Italy

Part 6: What if the heir is a minor?

Part 7: The “executor” in the Italian succession Law

Part 8: Frequently Asked Questions about the Italian Succession Law

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