Inheritance tax in Italy: A complete guide

Moving to Italy from the UK, or already living there? You’ll need to get to grips with the tax system, which can be tricky in a foreign country (especially if you’re not yet fluent in the language).

One area of Italian tax law you might need to know about is inheritance tax. You might have older relatives living in Italy or be making your own plans for retirement and later life. Or perhaps you’ve inherited a share in an Italian holiday home and need to know how much tax you’ll pay.

Read on for a full guide to inheritance tax in Italy, including rates, allowances, exemptions and how to calculate it.

We’ll also show you how to send large amounts of money securely between countries using the Wise Account. This can be extremely useful if you have inheritance tax to pay, or want to send money from an inheritance back to the UK.

Discover more about the Wise account

What is inheritance tax?

Inheritance tax, known as IHT in the UK, is a tax paid to the government on the estate of someone who has died. The ‘estate’ usually encompasses all property and possessions, as well as savings, investments and pensions.

Many countries have inheritance tax systems. Depending where in the world you are, the tax may be known as estate tax, inheritance tax or succession tax.

However, not all countries have this kind of tax in place. Australia, Singapore, Sweden and Norway are among a handful of countries which don’t charge inheritance tax at all.¹

Inheritance tax in Italy

In Italy, inheritance tax is known as Imposta di Successione. The laws apply nationally, and don’t vary by region.

Unlike in the UK where inheritance tax is payable by the estate, in Italy it’s payable by each beneficiary individually. Each person has a tax-free personal allowance, and they’ll have to pay tax on anything they inherit above this threshold. The allowance is pretty generous though, especially to spouses and children of the deceased person.²

The country’s inheritance tax laws also include a second tax on real estate. Known as property transfer tax or Imposta Catastale, it’s a rate payable according to the cadastral value of the property. This is the value given to the property by the local authorities, and it’s usually lower than the market value.²

Who pays inheritance tax in Italy?

Italian inheritance taxes are payable by all beneficiaries who are resident in Italy for tax purposes, on estates and property held worldwide. This means that if the deceased person had property overseas, you’ll still have to pay inheritance tax on it as a beneficiary living in Italy.²

The country’s inheritance taxes also apply to non-residents, but only for property and estates held in Italy.²

Each beneficiary will need to pay inheritance tax to the authorities. This is different to how it works in the UK, where a lump sum of tax is paid out of the estate.

It’s important to get professional tax advice to double check which country’s tax laws apply to you, especially if you live between countries or have property in multiple countries.

Inheritance tax rates in Italy

In the UK, a flat rate of tax is applied to estates valued over a certain sum. However, it works differently in Italy.

The Italian system uses tax rates which vary depending on the relationship of the beneficiary to the deceased. Spouses and children have lower tax rates, while the rate rises slightly for siblings, other heirs and non-related people entitled to an inheritance from the estate.

Beneficiaries who are related to the deceased person also get a personal tax-free allowance. This means they don’t pay tax on anything they inherit below it, and anything above the threshold is taxed.

The personal allowance for direct relations is high at €1 million EUR, which means that many people won’t have to pay inheritance tax at all.

Here are the current personal allowance thresholds and inheritance tax rates in Italy:³

Relationship to deceased	Personal allowance	Inheritance tax rate
Spouse	€1 million	4%
Children and grandchildren	€1 million	4%
Parents and grandparents	€1 million	4%
Siblings	€100,000	6%
Relatives up to the fourth degree (i.e. first cousins)	None	6%
Other heirs and non-related beneficiaries	None	8%

There are also estate taxes and mortgage taxes to consider, if the estate contains a house or other real estate property.

The *Imposta Catastale *or property transfer tax is 1% of the cadastral value of the home, while the mortgage tax is 2%.³

Taxable assets and exemptions

Under Italian inheritance laws, nearly all property and assets are considered to be taxable assets. The estimated value of real estate, possessions and money will be added up, along with the person’s debts (if any). Debts will be subtracted from the assets to come up with the total taxable value of the estate.

However, there are some exceptions. These include unit linked whole of life policies, government bonds and shares or equity in family businesses.⁴

If there is a business or significant company shareholding included in the estate, it will be exempt from tax if it is passed to the deceased’s children. This is only if they take control of the business for a minimum of five years.⁴

Also, if a property is a family home and will continue to be used as such, property transfer and mortgage taxes will be limited to a fixed amount of €200 EUR.⁴

How to calculate inheritance tax in Italy

Here’s an overview of how Italian inheritance tax can be calculated:

1. The taxable net asset is calculated, by minusing the liabilities (debts) from the value of the inventory of assets.
2. The taxable net asset is then distributed between heirs, according to Italian inheritance laws and the will of the deceased person.
3. For each beneficiary, the taxable sum is the amount left after their personal allowance has been deducted.
4. On the remaining sum, tax rates will apply according to the value of the inheritance received.

How to pay inheritance tax in Italy

If you are a beneficiary who is liable for inheritance tax, you’ll need to file a ‘Declaration of Succession’ or Dichiarazione di Successione. To do this, you’ll need documents such as the death certificate, ID for the deceased, title deeds for any property, a certified copy of the will and other key pieces of information.⁵

Any inheritance tax you owe will need to be paid within 60 days after the assessment of the estate is served.³ You should be able to pay it online, or you can contact the Italian Revenue Agency to find out about other ways to pay.

If you’re living in the UK or another country, a solution such as Wise could be ideal for sending a payment for inheritance tax to Italy. You can send money worldwide with Wise, for low fees* and mid-market exchange rates. There’s even a dedicated service for securely sending large amounts.

Wise - For big money transfers at life’s big moments

After reading this, you should have a better idea of how the Italian inheritance tax system works - and how it applies to you and your family. We’ve looked at personal allowances, rates, exemptions and who has to pay the tax.

We’ve also covered how to pay inheritance tax in Italy. If you need a way to pay inheritance tax, send inherited money back to the UK or generally manage your finances between countries - Wise is the perfect solution.

With Wise, you can hold and convert between 40+ currencies in your online account. And you can send money worldwide for low, transparent fees* and mid-market exchange rates.

If you’re sending a large sum between countries, read our quick guide on what documents you’ll need. Whether you’re paying foreign bills or trying to get the best exchange rates when repatriating funds from overseas back to the UK, your Wise account can do it all.

FAQs about inheritance tax in Italy

Below are some of the most frequently asked questions:

How much can I inherit without paying inheritance tax in Italy?

It all depends on your relationship to the person who has died. Depending on your relationship, you’ll have a tax-free allowance of between €100,000 and €1 million EUR.³

Do foreigners pay inheritance tax in Italy?

If you aren’t living in Italy but have real estate property there, you may need to pay local inheritance taxes as well as property transfer taxes.

If you’re living in Italy as a UK expat and are considered resident there for tax purposes, you’ll have to pay inheritance tax on everything you inherit (above your personal tax-free allowance). This includes property in other countries.

The UK and Italy have a double taxation treaty (which ensures expats don’t pay tax on the same income twice) but you’ll need to check if and how it applies to inheritance.

It’s recommended to get expert tax advice on which country’s tax laws apply to you and what your obligations are.

How is inheritance divided in Italy?

Italy uses a system called forced heirship to determine how inheritances are divided.

This is where close relatives of the deceased are considered to have a right to inherit a share of their estate, along with any stipulations laid out in the person’s will. If there’s no will or the will is ruled invalid, estates are divided in line with the country’s forced heirship laws.²

Which EU countries have no inheritance tax?

Within the EU, the following countries have no inheritance taxes:⁶

• Austria
• Cyprus
• Estonia
• Latvia
• Malta
• Romania
• Slovakia
• Sweden.

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Sources used:

1. The Telegraph - The countries that abolished inheritance tax – and are now booming
2. Giambrone Law - Italian Inheritance Tax
3. Expatica - The tax system in Italy: an overview
4. Mazzeschi - A quick guide to the Italian inheritance tax
5. Mazzeschi - All you need to know about the Italian inheritance law and succession procedure
6. Euro News - Inheritance tax across Europe: How do the rules, rates and revenues vary?

Sources last checked on date: 21-Aug-2024