Italy’s inheritance tax system underwent significant changes in 2025, creating new obligations and opportunities for heirs and estate planners. Legislative Decree No. 139/2024, which took effect on January 2025, introduced updated tax rates, exemption thresholds, and calculation methods that affect both Italian residents and international beneficiaries. Inheritance tax in Italy applies to the worldwide assets of the deceased if they were a resident in Italy at the time of death; otherwise, it applies only to assets in Italy. Anyone receiving an inheritance in Italy must understand these tax implications to avoid penalties and maximize their financial position.

Legal framework of Italian inheritance tax

The Italian inheritance tax system operates under the Testo Unico delle Successioni. This comprehensive legal framework governs how estates are taxed when assets transfer from deceased individuals to their heirs.

Legislative Decree No. 139/2024 brought major updates effective January 1, 2025. These changes modified exemption calculations, trust taxation rules, and business asset treatment. The reforms also introduced new residency-based considerations for international estates. Additionally, the transfer of a business or significant shareholding to a deceased’s children is exempt from tax if they continue the business or retain control for at least five years. The inheritance tax is calculated on the net value of the estate after subtracting debts and liabilities.

Italian tax authorities (Agenzia delle Entrate) administer inheritance tax collection and enforcement. They process tax declarations, conduct audits, and issue guidance on complex inheritance situations.

Who is subject to inheritance tax in Italy

Italian tax resident individuals face inheritance tax on their worldwide assets. Non-residents only pay tax on Italian-located property and assets. Non-residents inheriting from an Italian resident are liable for Italian inheritance tax only on Italian assets located in Italy. This distinction affects estate planning strategies for international families. Italian inheritance tax is paid individually by each beneficiary rather than being deducted from the estate before distribution.

Taxable assets include real estate, bank accounts, investment portfolios, and company shares. Personal belongings, vehicles, and certain business assets may qualify for exemptions. The location and type of asset determines the tax treatment. In addition to inheritance tax, beneficiaries may also be liable for property transfer tax based on the cadastral value of the property, which is lower than market value. Property transfer taxes of 3% apply when an Italian property is involved, including a mortgage tax of 2% and a cadastral tax of 1%.

Cross-border inheritances often involve double taxation treaties. These agreements prevent beneficiaries from paying inheritance tax in multiple countries on the same assets. Professional guidance helps maximize treaty benefits.

 

Tax rates and exemptions

Italy applies different inheritance tax rates based on family relationships. The 2025 tax structure includes three main brackets with corresponding exemption thresholds. Inheritance tax rates in Italy are directly linked to the relationship between the deceased and the heir, with closer relationships subject to lower tax rates. The Italian inheritance tax system is designed to impose lower tax burdens on close family members and higher rates on distant relatives and unrelated beneficiaries.

Spouses and direct descendants (4% tax rate)

Spouses and direct descendants pay 4% tax on overall net value of €1,000,000 per beneficiary. This tax free allowance provides significant protection for immediate family members. This category includes children, parents, and grandparents who receive preferential treatment under Italian law. Direct descendants also include adopted children, who have the same inheritance rights as biological children under Italian law.

The €1,000,000 exemption applies individually to each beneficiary, not to the total estate. This means a surviving spouse and two children could each receive €1,000,000 tax-free, for a total of €3,000,000 in exempt transfers from a single estate.

Siblings and close relatives (6% tax rate)

Siblings face a 6% tax rate with a €100,000 exemption threshold per beneficiary. This category includes brothers, sisters, and their descendants when inheriting from aunts or uncles. For example, if a sibling inherits €150,000, they pay 6% tax only on €50,000 (the amount exceeding the exemption), resulting in €3,000 in inheritance tax.

Half-siblings receive the same treatment as full siblings under Italian inheritance law. Step-siblings, however, are typically classified in the higher tax bracket unless legally adopted.

Distant relatives (6% tax rate)

Other relatives who fall into the 6% bracket include aunts, uncles, cousins, nephews, and nieces. These relationships must be proven through official documentation during the inheritance declaration process. In-laws generally do not qualify for this preferential rate unless they have been legally adopted into the family.

Unrelated beneficiaries (8% tax rate)

Unrelated beneficiaries pay the highest rate at 8% with no exemption protection. This means they pay tax on the entire inherited amount from the first euro. Friends, business partners, cohabiting partners (unless in a civil union), and charitable organizations fall into this category.

However, certain charitable and religious organizations may qualify for complete tax exemptions under specific Italian tax laws. These exemptions require proper documentation and may have restrictions on how the inherited assets are used.

Special exemptions and considerations

Business assets and company shares may qualify for reduced valuations if specific conditions are met. Family businesses that continue operating after the inheritance may receive preferential treatment to encourage business continuity.

Primary residences (casa di abitazione principale) receive special valuation rules that can reduce the taxable property value. The property must have been the deceased’s main residence and continue as the heir’s primary home to qualify.

Agricultural land and rural properties may also benefit from reduced tax assessments when inherited by qualifying family members who continue farming operations. These exemptions support Italy’s agricultural sector and rural communities.

Some regions and municipalities may impose local inheritance taxes or additional fees on top of the national inheritance tax rates. These vary by location and should be considered when planning estates involving property in multiple Italian jurisdictions.

2025 reforms to take note of

Italy introduced inheritance tax reforms through Legislative Decree No. 139/2024, which took effect on January 2025. These changes affect how inheritance and gift taxes are calculated and applied across different beneficiary categories.

Changes to gift and inheritance tax calculations

The 2025 reforms modified the relationship between lifetime gifts and inheritance tax calculations. The new rules require consideration of previous donations made during the deceased’s lifetime when determining tax obligations for heirs.

This change affects estate planning strategies that previously relied on separating gifts from inheritances. Families must now account for the cumulative value of transfers when they calculate inheritance tax liabilities and exemption thresholds.

Trust taxation clarifications

The reform addressed tax implications of transfers made through trusts for inheritance and gift tax purposes. These new provisions apply to deeds executed on or after January 1, 2025.

Trust structures now have clearer guidelines regarding when inheritance tax applies. This provides greater certainty for estate planners using trusts in their wealth transfer strategies.

The reforms also introduced new self-liquidation regimes that change how certain inheritance and gift taxes are calculated and paid. These changes mark a significant shift in tax administration methods.

Beneficiaries should note that Italy does not impose an estate tax on the total estate value like some other countries, but rather applies inheritance tax individually to each beneficiary’s share.

Italy’s inheritance tax system

Italy’s inheritance tax system balances revenue generation with family asset protection through tiered rates and exemptions. The 2025 reforms introduced important changes that affect both domestic and international estates.

Proactive estate planning helps families minimize tax burdens while preserving wealth for future generations. Professional guidance becomes particularly important for cross-border situations and complex asset structures.

Understanding these tax obligations protects beneficiaries from unexpected liabilities and maximizes inheritance value. Early planning creates opportunities for tax-efficient wealth transfer strategies.

Get expert legal assistance with Italian inheritance tax

Managing inheritance tax in Italy requires specialized knowledge of Italian law and international tax treaties. Aprigliano International Law Firm offers comprehensive estate planning and tax advisory services for both residents and non-residents dealing with Italian inheritances.

Our experienced legal team helps clients understand their tax obligations, file required declarations, and develop strategic estate plans that minimize tax exposure. We assist with Italian citizenship matters, business incorporations, and investment structures that support your long-term financial goals.

Don’t leave your inheritance tax planning to chance. Contact us today for personalized guidance on your Italian estate and tax matters.

Subscribe to our newsletter!