Italian Inheritance & Gift Tax: Key Rules (2025 Update)
Tax Rates by Beneficiary Relationship
- Spouse and direct descendants (children, grandchildren): 4% with a €1 million exemption per beneficiary.
- Siblings: 6% with a €100,000 exemption.
- Other relatives up to the fourth degree: 6% with no exemption.
- Unrelated individuals: 8% with no exemption.
See this article for a listing of degrees of kinship.
Residency-Based Taxation
IHGT applies to:
- Italian tax residents (at time of death or gift): taxed on worldwide assets;
- Non-residents: taxed only on assets located in Italy;
- Trusts with specific rules.
However the rules applicable to the Territorial scope of the tax are complex.
Taxable Base Values
- Real estate: taxed on the cadastral value, typically lower than market value.
- Other assets: taxed on fair market value at the time of transfer
Italian Inheritance Tax Calculator
We have a calculator to help you calculate the tax due on succession here
The Euro 1 million threshold
Legislative Decree 139/2024 abolished the Italian Inheritance and Gift Tax “succession aggregation” (coacervo successorio). The Decree explicitly repealed the part of the law that required the summing up lifetime gifts with the final estate, for purposes of calculating the Euro 1 million threshold applicable for gifts and legacies to spouses and direct descendants.
The principle of “succession aggregation “(coacervo successorio), means that the values of past gifts and the final estate on inheritance were to be summed for IHGT tax purposes. The legislation aligns prior Italian Supreme Court rulings that found succession aggregation to be incompatible with the proportional nature of IHGT.
The Decree maintains the gift aggregation (coacervo donativo) principle but separates its application between lifetime gifts and inheritance. This means that each gift needs to be checked to see if, together with the value of prior gifts made by the same person to the same beneficiary, the value has exceeded the tax-exempt threshold. The value of the estate passing on succession to a spouse/child will benefit from a separate Euro 1 million threshold.
The Decree provides that gifts made during from 2001-2006 should be excluded from the aggregation with amounts passing on death.
Lifetime gifts and transfers by way of inheritance now have separate exemptions, allowing up to €2 million tax-free per spouse/child (gift + inheritance).
This effectively allows up to Euro 2 million tax-free threshold per qualifying beneficiary.
Tax-Exempt Assets
Business Assets
- Family-owned businesses (including shares in closely held companies) may be exempt if:
- The business is transferred to spouse or direct descendants.
- The heirs continue the business for at least 5 years.
- A formal declaration of continuation is filed with the Revenue Agency.
Applies to sole proprietorships, partnerships, and corporate shares.
No tax due if conditions are met.
Government Bonds and Similar Securities
Italian government bonds (e.g., BTPs, BOTs, CCTs) are fully exempt from inheritance and gift tax.
EU government bonds may also qualify if held by Italian residents, as may bonds issued by a non-EU if bilateral arrangements permit in the circumstances.
Exemption applies to both principal and accrued interest.
Primary Residence
If inherited by spouse or children who continue to reside in the property, the property transfer may qualify for a reduced fixed rate of mortgage and cadastral tax – see below.
This applies only to one primary residence per beneficiary.
Cultural and Historic Assets
Assets of artistic, historical, or cultural value registered with the Ministry of Culture may be exempt.
Conditions include preservation obligations and restricted sale rights.
Life Insurance Policies
Life insurance payouts are not subject to inheritance tax, regardless of amount or beneficiary.
This makes life insurance a powerful estate planning tool in Italy. A charge to Italian income tax on the accrued yield or gain on with-profits or unit linked policies will likely apply.
Pension Rights and Severance Pay
TFR (Trattamento di Fine Rapporto) and certain pension entitlements are exempt from IHGT when transferred to heirs. In terms of pension Italian rules refer to Italian statutory social security schemes and schemes managed by a Regulated Italian pension fund manager. Non discrimination rules under EU rules or a bilateral IHGT treaty may operate to extend the exemption to regulated pension schemes in another jurisdiction. Note there is no non discrimination clause in Italy’s treaty with the UK.
Prima Casa Relief on Inherited Property
Many people assume that inheriting a property which qualifies as a prima casa (first home) means that the property is exempt from Italian inheritance tax. This is not the case.
The value of the inherited property is included in the beneficiary’s inheritance for the purposes of calculating inheritance tax. It therefore counts towards the applicable tax-free allowance (currently €1 million for a spouse or direct descendant) and, where that allowance is exceeded, the value of the property is subject to inheritance tax in the same way as any other inherited asset.
The prima casa relief applies only to the mortgage tax (imposta ipotecaria) and the cadastral tax (imposta catastale) payable on registering the transfer of the property.
Without the relief, these taxes are generally payable at:
Mortgage tax: 2% of the cadastral value.
Cadastral tax: 1% of the cadastral value.
on Italian real estate.
Where the beneficiary qualifies for the prima casa relief, these proportional taxes are replaced by fixed amounts of €200 mortgage tax and €200 cadastral tax, regardless of the value of the property.
Conditions for the relief
The beneficiary must satisfy substantially the same conditions as apply when purchasing a first home, including:
the property must not fall within the luxury property categories excluded from the relief;
the beneficiary must not already own another property acquired using the Italian prima casa relief, unless the statutory replacement conditions are satisfied;
the beneficiary must establish or already have his or her residence in the municipality where the property is situated within 18 months of the inheritance, unless already resident there or another statutory exception applies.
The relief is claimed in the succession declaration and is available even though the property was acquired by inheritance rather than by purchase.
It is therefore important to distinguish between the two taxes. The prima casa relief can produce a substantial saving in mortgage and cadastral taxes on Italian inherited real estate, but it does not reduce the value of the inherited real estate for inheritance tax purposes, nor does it increase the inheritance tax threshold available to the beneficiary.