Tax Implications for Someone in Italy to Inherit Money

In Italy, inheriting money from a foreigner can be a complex process, but it's not impossible. The Italian tax authority, Agenzia delle Entrate, considers foreign inheritances as taxable income.

The tax implications depend on the type of inheritance, with movable assets such as cash, stocks, and bonds being taxed differently than immovable assets like real estate. The Italian tax code, Article 2 of Law No. 117 of 1962, distinguishes between these two categories.

As a general rule, the Italian tax authority allows for a tax deduction on foreign inheritance, which can reduce the tax burden. This deduction is capped at 15% of the total inheritance value, according to Article 8 of Law No. 117 of 1962.

You have a year to claim your inheritance in Italy, but failing to provide all documents and submit the application within this timeframe may result in penalties.

The Italian inheritance tax is payable by anyone who resided in Italy, and it applies to all worldwide assets that belonged to the deceased. This means that even non-residents may be liable for Italian inheritance tax if they own assets in the country.

The taxable base for Italian inheritance tax is the difference between the total value of the active hereditary mass and the value of liabilities and deductible burdens. This calculation can be complex, but it's essential to understand it to determine the amount of tax owed.

If the active hereditary mass includes real estate and real property rights, you'll need to pay mortgage and cadastral taxes, which amount to 2% and 1% of the value of the properties, respectively. The minimum amount for each tax is 200 euros.

There are some exemptions from paying inheritance tax in Italy. For example, if the inheritance is transmitted to the spouse or direct relatives of the testator, and the active hereditary mass is not more than 100,000 euros, with no real estate or rights on real estate, you may not need to pay tax.

The payment of Italian inheritance tax is made using the F24 form, which will be attached to the communication from the Italian Revenue Agency. You can pay the tax at the Agency for Revenue – Collection or at a bank/Post Office.

Here's a summary of the payment options:

Keep in mind that payment in installments attracts interest from the first day after the initial payment. It's essential to understand these payment options and the tax implications to ensure a smooth inheritance process in Italy.

To pay the Italian inheritance tax, you'll need to obtain an Italian Grant of Probate, which must be done within one year of the date of death. This is a mandatory step before assets can be released to the beneficiaries.

The payment must be made using the F24 form, which will be attached to the communication from the Italian Revenue Agency, at the Agency for Revenue – Collection or at a bank/Post Office. You can also pay by direct debit.

The inheritance tax rates vary depending on the relationship between the beneficiary and the deceased. For immediate family members, the tax rate is 4% on the portion exceeding the €1,000,000 allowance, while for siblings, it's 6% on the portion exceeding the €100,000 allowance.

Here's a breakdown of the tax rates:

In addition to the inheritance tax, beneficiaries may also need to pay other taxes, such as cadastral taxes (1% of the cadastral value of the inheritance share) and mortgage taxes (2% of the cadastral value of the inheritance share). The minimum amount for each tax is €200.00.

To navigate the payment process for Italian inheritance tax, you'll need to obtain an Italian Grant of Probate, known as a Dichiarazione di Successione, which must be done within one year of the date of death.

The beneficiaries will receive a communication from the Italian Revenue Agency with an attached F24 form, which they'll need to use to make the payment.

The payment can be made at the Agency for Revenue – Collection or at a bank/Post Office.

Payment in installments is also possible, but you'll need to pay at least 20% of the amount within 60 days from the notification of the assessment notice.

The remainder must be paid in 8 quarterly installments, with interest calculated from the first day after the initial payment, unless the amount is over 20,000 euros, in which case you'll have 12 installments.

In Italy, claiming a foreign inheritance requires specific documentation, such as a death certificate and a will, if one exists. The Declaration of Succession serves as the critical document filed with the Italian Tax Authority, declaring the inheritance and including details like the deceased's information, heirs, and asset values.

You have one year to claim the inheritance and submit the application, or you may face penalties. The exact procedure for transferring assets depends on the type of asset involved, such as real estate or financial assets.

To transfer real estate, you'll need to involve a notary and register the transfer with the Italian Land Registry. For financial assets, you'll typically need to provide a death certificate, will, Declaration of Succession, and proof of your identity as the heir.

You may also owe taxes to the tax authority in the country of residence where the inheritance originates. Italian inheritance tax is payable by anyone who resided in Italy and applies to all worldwide assets that belonged to the deceased.

Non-residents only pay Italian inheritance tax on assets situated in Italy, and cross-border agreements can prevent double taxation. If an estate includes a business or significant shareholding, these assets won't be taxed if passed to the deceased's children who continue the business or take control of the company for at least five years.

Here's a breakdown of the Italian inheritance tax rates for real estate:

In addition to real estate, you'll need to pay mortgage and cadastral taxes, amounting to 2% and 1% of the property value, respectively. The minimum tax amount is 200 euros for each tax.

Inheriting money from abroad can be a complex process, especially for Italians who need to navigate the intricacies of foreign and dual taxation. Italian residents who inherit assets from abroad face challenges due to major variations in local and foreign inheritance rules.

Italy charges inheritance taxes on Italian residents, regardless of where the inherited assets are located. This means you'll have to pay taxes in Italy, even if the assets are stored in another country. The country where the deceased individual lived or where the assets are stored may also levy estate, inheritance, or gift taxes, leading to dual taxation.

Italy has double taxation treaties with numerous countries to mitigate this issue. Here's a list of some of the countries covered under these treaties:

Foreign Asset Planning can be a daunting task, especially when dealing with Italian inheritance laws. Italian residents inheriting assets from abroad face significant challenges due to variations in local and foreign inheritance rules.

You'll need to navigate the complexities of dual taxation, where Italy charges inheritance taxes regardless of the assets' location. This can lead to identical assets being taxed twice, once in the country of origin and again in Italy.

Fortunately, Italy has double taxation treaties with numerous countries to mitigate this issue. You can find a list of these countries in the table below.

These treaties can help reduce the tax burden, but it's essential to understand the specific rules and regulations that apply to your situation.

Dual taxation is a common issue when it comes to inheritance in Italy. Italy charges inheritance taxes on Italian residents, regardless of where the inherited assets are located.

The country where the deceased individual lived or where the assets are stored may also levy estate tax, inheritance, or gift taxes, leading to double taxation. This is because Italy has no specific rules to avoid double taxation on inherited assets.

To mitigate this issue, Italy has double taxation treaties with numerous countries, including those in Europe, North America, Asia, and the rest of the world. Here's a list of some of the countries with which Italy has double taxation treaties:

These treaties aim to prevent double taxation and fiscal evasion, but it's essential to review the specific terms and conditions of each treaty to understand how they apply to your situation.

In the UK, you have the freedom to will your estate to whoever you please.

The UK's testamentary freedom is a stark contrast to countries like Italy, where the law of 'forced heirship' applies if there is no will or a will is ruled invalid.

In Italy, certain family members have a right to inherit a share of the estate, regardless of the deceased person's wishes.

This can be a challenge for non-Italian residents with Italian assets, as they may still be liable for Italian inheritance tax.

The European Succession Regulation introduced in 2015 aimed to simplify cross-border succession, but it didn't address Italian inheritance tax.

In Italy, the final will of the deceased determines inheritance law, regardless of the type of assets involved. The will outlines how assets and liabilities are to be distributed among heirs.

A Public Notary oversees the opening of succession and ensures the validity of the testament, as well as compliance with mandatory provisions and public policy. This includes ensuring that heirs receive their legitimate portions and that there is no disinheritance.

The notary will distribute the assets according to the decedent's will, and if there is no will, the law dictates the conditions and distribution of assets. The EU Succession Regulation provides some flexibility in this process, allowing for the use of one's own country's inheritance laws under certain conditions.

Here's a breakdown of the different types of inheritors in Italy:

In cases of intestacy, the law dictates the conditions and distribution of assets, which includes the requirement for heirs to accept the succession to inherit their share of the estate.

In Italy, the submission requirements for the declaration of succession are quite specific. The heirs, those called to the inheritance, the legatees, the administrators of the inheritance, the curators, the executor of the will, and the trusts are all obliged to present the declaration of succession.

According to articles 28 and 29 of Legislative Decree No. 346 of 1990, these individuals must submit the declaration of succession. This includes multiple subjects, such as heirs and administrators, who are jointly responsible for presenting the declaration.

If you're claiming a foreign inheritance while living in Italy, you'll need to file the Declaration of Succession with the Italian Tax Authority (Agenzia delle Entrate) within a year of the deceased's passing. This document officially declares your acceptance of the inheritance and includes details like the deceased's information, a list of all heirs, and the description and value of assets being inherited.

The declaration of succession must be submitted by the heirs or those called to the inheritance, and it's sufficient if just one of them presents it. However, it's essential to note that if there are multiple subjects obliged to present the declaration, they should all be aware of their responsibilities and take necessary actions.

In Italy, the final will of the deceased determines inheritance law, regardless of the type of assets involved. The Public Notary oversees the opening of succession and ensures the validity of the testament.

A Public Notary or a Public Servant is responsible for completing the legal formalities in the succession procedure. They distribute the assets following the interpretation of the decedent's will.

The EU Succession Regulation provides considerable latitude in administering the estate planning. However, the law dictates the conditions and distribution in cases of intestacy.

If you fail to provide all the documents and submit the application within a year, you may face penalties when claiming a foreign inheritance while living in Italy. You have to submit a Declaration of Succession, which declares that you have accepted the inheritance and includes details like the deceased's information, a list of heirs, and the description and value of assets being inherited.

The Declaration of Succession is a critical document that you'll file with the Italian Tax Authority (Agenzia delle Entrate). It officially declares that you have accepted the inheritance and includes details like the deceased's information, a list of heirs, and the description and value of assets being inherited.

The transfer of assets depends on the type of asset involved. For real estate, a Notary Involvement is required, and the transfer of ownership needs to be registered with the Italian Land Registry. For bank accounts and financial assets, you'll likely need to provide the death certificate, will (if applicable), Declaration of Succession, and proof of your identity as the heir.

Here's a breakdown of the inheritance tax rates in Italy:

If the active hereditary mass includes real estate and real property rights, it's mandatory to pay mortgage and cadastral taxes, in the amount of 2% and 1% of the value of the properties. The minimum amount is 200 euros for each tax.

Succession refers to the transfer of assets and liabilities to one or more heirs due to someone's death. The heirs may inherit the deceased's entire estate or part of it, as per their shares – “successione a titolo universale“. They are required to accept the succession to inherit the share of the estate they are entitled.

The legatee is someone that inherits a specific asset as identified by the testator. The legatee is liable for the deceased's debt, up to the value of asset devolved to him or her – “successione a titolo particolare“.

If the declaration of succession isn't submitted, you'll face a fine ranging from 120% to 240% of the tax assessed or reassessed officially.

A fine of 250 to 1,000 euros is applied if no tax is due.

If there's only a delay in submitting the declaration, an administrative fine from 60% to 120% of the tax assessed or reassessed is imposed.

If the delay doesn't exceed 90 days, the penalty for failing to submit the declaration is reduced to 1/10 of the minimum.

The declaration submitted within the deadline can be supplemented, benefiting from a reduction of penalties in relation to the delay.

A reduction of 1/9 of the minimum is applied if the declaration is regularized within 90 days.

A reduction of 1/8 of the minimum is applied if the declaration is regularized within 1 year.

A reduction of 1/7 of the minimum is applied if the declaration is regularized within 2 years.

A reduction of 1/6 of the minimum is applied if the declaration is regularized after 2 years.