Rates, allowances and cross-border rules for international families: what Italy taxes, who pays, and how to pass property and businesses at little or no tax.
Italy taxes inheritances more lightly than almost any comparable country. Rates run from 4% to 8%, a spouse or child can receive up to €1 million each entirely free of tax, and real estate enters the estate at its cadastral value rather than its market price. For most families, the Italian inheritance tax bill is zero.
The problems, when they come, come from elsewhere: not knowing whether Italy taxes the worldwide estate or only the Italian apartment; a twelve-month filing deadline that runs from the date of death; a foreign country taxing the same estate again; a family business that could have passed tax-free but did not, because one condition was missed. If your question is who inherits rather than how much they pay, start with our estate planning and succession service.
American and British readers usually search for Italian estate tax, but Italy does not levy an estate tax at all. The imposta di successione is charged on the enrichment of each person receiving assets, so it is calculated beneficiary by beneficiary. There is no estate-level tax and no probate as a common-law reader would recognise it: the heirs step into the deceased's position, and each is taxed on the net value of what they personally receive.
Two consequences follow. Allowances are personal: an estate of €4 million divided between four children is four transfers of €1 million, and none is taxed. And liability sits with the beneficiaries: heirs are jointly liable for the total tax, while a legatee is liable only for their own legacy.
Everything turns on one question: was the deceased resident in Italy at the moment of death? The residence of the heirs is irrelevant. A son living in Buenos Aires who inherits from a father resident in Modena owes Italian tax on his share; an heir in Milan who inherits from a parent resident in Paris owes Italian tax only on what that parent held in Italy.
Inheritance tax does not use the income tax residence test. The prevailing view is that what matters is civil-law residence, the place of habitual abode, so a person can be non-resident for income tax and still resident for inheritance tax, or the reverse. Anyone who moved to or from Italy in the years before death should have this checked rather than assumed.
Where the deceased was not resident, the perimeter is fixed by statute and no evidence to the contrary is admitted. The item that catches most people is the second one: a shareholding in an Italian company is an Italian asset wherever the shareholder, the certificate or the bank sits. Interposing a foreign holding company does not automatically solve the problem, nor does it automatically fail.
The rate depends on how closely the beneficiary was related to the deceased. Some categories also have a tax-free allowance (franchigia), below which no tax at all is due.
The allowance belongs to each beneficiary and is not shared: an estate of €2 million passing equally to a spouse and a child is entirely exempt. Allowances do not stack: a disabled child takes the more favourable of the two. Relatives by marriage never have an allowance, and an unmarried partner is taxed at 8% on everything, the most frequent and most expensive surprise in cross-border estates. A civil-union partner, by contrast, is treated as a spouse.
A British couple resident in Italy own a villa in Tuscany with a cadastral value of €1.8 million and a portfolio of €700,000. On the first death everything passes to the surviving spouse and their only child in equal shares: €1.25 million each, €250,000 above each allowance, taxed at 4%. Total: €20,000, an effective rate below 1%. Leave the same estate to a nephew and the tax is €150,000; to an unmarried partner, €200,000. In Italy the question is almost never how large the estate is. It is who is receiving it.
Tax is charged on the net value each beneficiary receives. Real estate is the decisive item: a value declared in line with the cadastral value is not subject to assessment, and cadastral value is commonly 30% to 40% below market, far more for older property in sought-after places. A business is valued on its balance sheet, with goodwill always excluded; listed securities at the average price of the previous quarter. This is the quiet reason Italian inheritance tax so often comes out at zero.
Where the estate includes Italian real estate, mortgage tax at 2% and cadastral tax at 1% of the cadastral value are due as well. They are due even when the inheritance tax itself is zero: the €1 million allowance does nothing for them, and for the typical family estate they are the real bill. If at least one beneficiary meets the first-home requirements, both drop to a fixed €200 each. For the annual taxes on the property afterwards, see our property taxes support.
A number of assets are exempt, and several are exactly the assets an internationally mobile family is likely to hold. Two portfolios of identical market value can produce very different results depending on what sits inside them.
The most valuable relief in the system: where the conditions are met, the tax on a business or shareholding is nil, on the whole value. It covers transfers by succession, gift or family pact to descendants or the spouse only: not to a sibling, a nephew or an unrelated successor. For companies with share capital, the transferred quotas must give the beneficiary legal control, or integrate a control position already held, and the beneficiaries must keep control, or carry on the business, for five years, with a formal undertaking at the time of transfer.
The relief also applies to shares in companies resident in the EU, the EEA and states with an adequate exchange of information, so a number of non-EU holdings, including US companies, can fall within it: a point of real value that generalist guidance misses. The Revenue Agency also requires control to be real: special rights kept by the transferor in the articles can defeat the relief. The tax outcome turns entirely on the drafting.
Gift tax mirrors inheritance tax: the same rates, allowances and degrees of kinship. For successions opened from 1 January 2025, the coacervo has been abolished: lifetime gifts no longer erode the allowance available on death. A child can receive €1 million by gift and a further €1 million by inheritance from the same parent, and neither is taxed. Across two parents, with goodwill excluded and cadastral values working in the same direction, a substantial family estate can pass at no tax cost, provided the gifts are made in good time.
Two limits remain. Gifts are still subject to the reserved share of protected heirs and can be challenged. And a gift of bare ownership with reservation of usufruct needs care where company shares are involved.
This is where inheritance tax stops being a compliance topic and becomes a reason to move. Taxpayers who elect the lump sum tax for high-net-worth individuals (€300,000 a year on all foreign income for those moving from 2026) obtain a second, less publicised benefit: for as long as the option is in force, Italian inheritance and gift tax applies only to assets in Italy. A family holding most of its wealth abroad can be Italian resident and keep that wealth outside the Italian succession charge.
The 7% regime for pensioners and the impatriati regime are income tax reliefs only: a confusion we correct regularly, and an expensive one to carry into an estate plan.
Italy taxes by reference to the residence of the deceased; many countries do not. France looks to the heir, Germany to either party, the United Kingdom levies 40% on a basis now tied to long-term residence, and the United States taxes its citizens' estates wherever they live. Italy has only seven inheritance tax treaties: with the United States, the United Kingdom, France, Denmark, Sweden, Greece and Israel. Most cross-border estates fall outside treaty protection.
Where no treaty applies, Italy credits tax paid abroad on foreign assets, capped at the Italian tax attributable to them. Because the credit is capped, it neutralises the overlap only where the foreign rate is lower: against the United Kingdom's 40% it will not refund the difference.
For American families, the federal estate tax exemption is very large (around $15 million per person from 2026), so for most the American charge is nil and the Italian one is the only real question. The interaction is still sensitive to the order in which the two systems apply, and a case for coordinated advice.
No amount of tax efficiency survives contact with Italian forced heirship. A reserved share (legittima) belongs by law to the spouse and children, and gifts or bequests that encroach on it can be challenged by protected heirs, sometimes years later.
For foreign nationals there is a way through. Under EU Regulation 650/2012, a person may elect in their will for the law of their nationality to govern their succession. An American or British national resident in Italy can choose their own national law, which usually has no reserved share. The election governs succession, not tax: Italian inheritance tax still applies as set out here.
Trusts are now expressly within the tax: if the settlor was resident in Italy when assets were placed in trust, the tax reaches everything transferred to beneficiaries; if not, only Italian assets. The settlor may also elect to pay up front, locking in today's rates and values.
The procedure changed fundamentally in 2025: the Revenue Agency no longer calculates the tax; the heirs self-assess it in the return. Guidance that still describes waiting for a settlement notice is describing a system that no longer exists.
No declaration is needed when three conditions are met together: the estate passes to the spouse and direct-line relatives, it includes no real estate, and the gross estate does not exceed €100,000. Add a garage and the obligation revives.
Twelve months sounds generous and rarely is for cross-border families: legalising foreign certificates, valuing assets in several countries and obtaining Italian tax codes for heirs abroad take time. Treat the clock as starting at the funeral. We handle the whole filing for heirs in Italy and abroad.
Against the United Kingdom's 40% above £325,000 and French and German rates reaching 45% to 50%, Italy charges 4% to 8% above €1 million per beneficiary, on a property value well below market. The mirror image deserves equal clarity: Italy is generous to close family and hard on everyone else, with no allowance for in-laws, distant relatives or an unmarried partner. Whether Italy is favourable to a particular estate is a question about the family.
Avv. Marco Mesina, a member of the Milan Bar (Ordine degli Avvocati di Milano) and formerly of Deloitte and Withers, advises international families and their foreign counsel on the Italian side of a succession, before and after death: establishing whether Italy reaches the worldwide estate or only the Italian assets, structuring a business handover so the exemption survives, coordinating with US and UK counsel, using the lump sum tax deliberately rather than by accident, and filing for heirs who live abroad. Where a single clause decides whether a company passes at nil or at full rate, that experience protects the estate.
Not in the US or UK sense. Italy has an inheritance tax charged on each beneficiary, on what they personally receive, at a rate set by their relationship to the deceased. That is why the allowance is €1 million per beneficiary.
Yes. Where the deceased was not resident in Italy, the tax is due on Italian assets, including the apartment. Your own residence is irrelevant. Mortgage and cadastral taxes are also due, and a declaration is required.
No inheritance tax: the transfer is within your €1 million allowance. If the estate includes real estate, mortgage and cadastral taxes are still due and a declaration must be filed.
No. Italian government debt, equivalent EU and EEA public debt, State-guaranteed securities and certain supranational issues are excluded from the taxable estate.
No. Both are income tax reliefs. Only the lump sum tax for HNWIs confines inheritance and gift tax to Italian assets, while the option is in force.
Potentially, because the US taxes citizens' estates worldwide. In practice the large federal exemption means most families face no US charge, and the 1955 treaty and the Italian credit address the overlap.
Twelve months from the date of death to file the declaration, and a further 90 days to pay the self-assessed tax. Different starting points apply for executors, trustees and estates accepted with the benefit of inventory.
Gifts are taxed on the same rates and allowances, but since 2025 they no longer erode the allowance available on death: the two are separate. Gifts remain subject to the reserved share.
An unmarried partner is taxed at 8% with no allowance, while a spouse or civil partner receives €1 million tax-free. Where marriage is not an option, plan deliberately and early.
Avv. Marco Mesina
Founder, Move to Dolce Vita · Avvocato, Milan Bar (Ordine degli Avvocati di Milano)
Marco is an Italian tax lawyer who advises individuals and families relocating to Italy on tax regimes, residency, citizenship, real estate and succession planning. Before founding Move to Dolce Vita he worked at Watson Farley & Williams, Withers and Deloitte in Milan.