Italian succession taxes: everything you need to know
So you’re inheriting Italian property: did you know that it may be subject to taxes?
There are three types of Italian succession taxes:
- Estate Tax (Imposta di Successione)
- Mortgage Tax (Imposta Ipotecaria)
- Cadastral or Property Transfer Tax (Imposta Catastale).
Our italian inheritance lawyers are specialized in this field and will be able to offer the best advice to solve your problems about the inheritance. Contact us to learn more!
How the Italian Estate Tax works
The Estate Tax (Imposta di Successione) applies to the full net value of the estate, including fixed and non-fixed assets.
The rate of this tax varies depending on the beneficiary’s relationship to the deceased:
- the surviving spouse and immediate family (children and/or parents) have to pay 4% on the amount exceeding 1 million Euros. In the case of disabled children, the 4% is due on the amount exceeding €1,500,000;
- the siblings have a € 100,000 allowance, after which the have to pay a 6% rate on the estate value;
- other relatives up to (and including) the fourth level of kinship, direct line in-laws and indirect line in-laws up to (and including) the 3rd degree of kinship pay 6 percent, with no allowance;
- every other heir is liable to pay an 8% rate, with no allowance.
How the Italian Mortgage Tax works
The Mortgage Tax (Imposta Ipotecaria) is payable at 2 percent of the property value set on the cadastral record.
The only exception occurs if the property will remain the primary residence of the beneficiary. In this case, the rate goes down to €200.
How the Italian Property Transfer Tax works
The Property Transfer Tax (Imposta Catastale) is applicable when there is a property located in Italy to be transferred. It is charged at 3% of the property value set on the cadastral record (valore catastale).
The cadastral value is usually 30 to 40 percent lower than the market value.
What types of inherited assets are taxable in Italy?
Inheritance tax applies to the following categories of assets:
- Real estate
- Private bonds (not government bonds)
- Equity or shares in a non-family business
- Managed funds
- Savings and bank accounts
- Furniture and jewelry
- Trust assets
The following are not currently taxed upon death:
- Life Insurance Policies (unit linked whole of life policies)
- Government bonds
- Family business shareholdings
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