Italian Inheritance Tax: How Does It Work?

Italian Inheritance tax is payable by the beneficiaries of the deceased’s estate 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, 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
• 6% of the value of the share for other relatives up to the fourth degree and in-laws up to the third degree without applying the threshold.
• 8% of the value of the share with no threshold for other individuals. This means that the 8% is payable to the entire value of the asset inherited. This is the case of cohabitants (couple who are not married nor united in a civil union).

If the beneficiary is a disabled person, with a severe disability according to law n. 104 of 1992, there is a higher threshold of 1.5 million euros, regardless of the degree of kinship.

Inheritance Tax on Real Estate

When the deceased’s asset consists of immovable property, the inheritance tax payable is based on the cadastral value of the property, which is obtained by multiplying the property’s cadastral income by a coefficient that varies according to the category of the property (i.e. residential house, office, shop etc.). Please note that the cadastral value of an immovable property is not the same as its current market value.

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

1. cadastral tax (1% of the cadastral value of the property)
2. mortgage tax(2% of the cadastral value of the property)

However, law no. 342 of 2000 has extended the “first home” benefit to inheritances and donations, allowing heirs to benefit from it in the event of succession: the requirements are stringent and will be verified on a case-by-case basis. If this benefit is due, the cadastral tax becomes fixed at €200.00, and the same occurs for the mortgage tax at €200.00.

In addition to these taxes, other fixed taxes are due based on the number of properties, to obtain the transcription of the ownership’s transfer of the properties to the land registry.

This article was written by Atty Sara Bocci, Atty Caterina De Carolis and Barbara Burroni.