In the first part of the article, we analised the following aspects:
- What are the general rules and principles how succession is governed under Italian law
- How many taxes there are and when these are due;
- Dichiarazione di Successione
- What information shall be declared in the Dichiarazione di Successione;
In this second part of the article, we will focus the attention on what are the exemptions and relief allowed by Italian law when it comes to pay inheritance tax.
Moreover, we will give you some other useful information that shall be taken into consideration when dealing with an Italian probate.
What are the rates, exemptions and relief?
As a general principle, inheritance tax applies to the worldwide assets of Italian residents. Instead, for non-residents in Italy at the time of death, taxes will be calculated on the basis of the assets located in Italy only.
Following the above principle, there are some important points to consider in respect of Italian inheritance tax (IHT):
- IHT is applied taking into consideration the residency of the deceased at the time of death;
- IHT is applied irrespectively of the deceased’s and the beneficiaries’ nationality;
- Should the deceased be non-resident in Italy, IHT would be calculated in connection with the Italian immovable properties only (i.e. real estate assets)
Exemptions and relief
Inheritance and gift tax and tax-exempt threshold
|Spouse or linear relatives (descendant, ascendant)||4% on the total assets’ value with a tax-exempt threshold of €1 million for each heir or beneficiary|
|Siblings||6% on the total assets’ value with a tax-exempt threshold of €100,000 for each heir or beneficiary|
|Other relatives (including uncles, aunts, nephews, nieces and cousins) and other relatives||6% on the total assets’ value with no tax-exempt threshold|
|Other persons or entities different from the ones listed above||8% on the total assets’ value with no tax-exempt threshold|
|Persons with critical disablements within the meaning provided by the applicable Italian law||€1,5 million for each heir or beneficiary. Over the threshold the same rates listed above apply depending on the relationship with the deceased|
Who has to file the Dichiarazione di Successione and obtain Italian Grant of Probate?
The rules are very general on this point. It is sufficient that all relevant paperwork, jointly with the inheritance application, is filed by at least one heir or beneficiary. Therefore, there is no obligation for all heirs or beneficiaries to intervene in this process.
Is there any limitation time to file the Dichiarazione di Successione?
Yes. Pursuant to Italian law, the Grant of Probate should be obtained within the limitation period of one year from the date of death.
Within this time the heir, beneficiaries or the advisors instructed to carry out this activity shall collate all relevant documentation, complete the Dichiarazione di Successione, pay the taxes due on behalf of the heirs and file the application before the competent Revenue Office in Italy.
What happens if I file the application after the limitation period of one year?
In some cases, depending on the circumstances of each case, it may not be possible to submit the application within the year following the deceased’s death. In general, there matter could be delayed when there is a dispute among the heirs, when there are discrepancies at the land registry, when there are some difficulties in dealing with the banks, and more.
It is unfortunate that in some occasions it is not possible to collect all the documents within a short period of time and this causes further delays. There are, however, certain measures you can take in order to minimize and mitigate these penalties.
In circumstances where you the application is submitted with delay, some penalties will apply. The more time elapses, the higher the penalties.
Who and when has to pay the Italian inheritance tax?
The beneficiaries of the estate will be liable to pay the amount of taxes as well as all disbursements due in order to obtain the Italian Grant of Probate.
It is general practise that most beneficiaries contribute towards those expenses according to the quota of estate they have received; however, this does not prevent them from making different arrangements.
As said in our previous article, there are two types of taxes due:
- one of them, which could be defined as property transfer tax, is due before obtaining the Italian Grant of Probate (Dichiarazione di Successione); whereas
- the other one, inheritance tax (IHT), if due, shall be calculated by the Revenue Office and paid at a later stage.
The Italian Inheritance: English Speaking Italian Specialists Lawyers
We specialise in cross border inheritance probate. Thus, if you are seeking expert guidance on Italian inheritance tax, or any other aspect involving Italian law, please do not hesitate to contact us. We will be to provide you further information and to study in more depth the circumstances of your case on an individual basis. We look forward to assisting you.
For more information you can contact us on firstname.lastname@example.org or on (+39) 02 3663 8610. Alternatively, you can visit us on www.theitalianinheritance.com.
Note: The tax rates and reliefs quoted in this article were correct at the time of publishing, however these may change. It is essential therefore that you do not base any action on any of the information contained in this article and that you seek independent advice first.