QUESTION:

My late father owned an apartment in Italy with his brother.
Will my mother (Swedish citizen) inherit my father’s share? Now we will do the actual transfer of ownership. I wonder what we should think about.

What inheritance taxes are payable in Italy? If I understand correctly, there is no inheritance tax if the value is less than one million euros. 

ANSWER:

Hi, thanks for your email.
What you wrote is correct. If the value of your father’s assets in Italy does not exceed one million euros, you will not pay inheritance tax in Italy.

Don’t forget that if your inheritance also includes a property (house or even just some shares of a house), you will have to pay certain taxes on the transfer of the property. Italian Cadastre registry and all data must be updated.

The Italian Cadastre registry is divided in two sub-systems:

  • Urban Building Cadastre (Catasto Urbano) => list of all buildings for civil, industrial and commercial use;
  • Land Cadastre (Catasto Terreni) => list of all rural properties and unbuilt land plots.

If the estate in Italy also includes real estate, the following taxes will be due:

GENERAL SITUATION (not resident in Italy)

Taxes are as follows:

– imposta ipotecaria, 2% of the cadastral value of the property;

– imposta catastale, 1% of the cadastral value of the property.

Note: the cadastral value is the value that the Italian administration gives to each property, based on data found on the Italian cadastre registry. The cadastral value is usually significantly lower than the “selling price” of the house

If I transfer my residence to Italy, what tax benefits would I be entitled to?

TAX BENEFIST *

Taxes are as follows:
– mortgage tax 200 € (fixed amount)
– cadastral tax 200 € (fixed amount)

* Not applicable to luxury properties.

However, the above tax benefits are subject to the following conditions

  • if the heir will establish his/her residence in the Italian inherited house (or in the municipality where the inherited house is located) within 18 months;
  • if the heir has no other property in Italy purchased with the same tax advantage;
  • if the heir does not own another property in the same municipality where the inherited house is located.
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Below is a brief summary of obligations that must be performed in the event of succession in Italy :

  1. draw up and submit an declaration of succession to the Italian tax authorities within 12 months of the death and pay taxes on the transfer of property;
  2. you must update the information in the Italian Cadastre registry when you draw up the declaration of succession;
  3. if your father also had a bank account, you will need to prove to the bank that you have the right to inherit so that they can transfer money to you and close the account;
  4. it is always a good idea to inform the municipality about the property transfer and to check that all the data concerning waste tax is up to date;
  5. update your names on bills (electricity, water, gas, etc.).

Finally, I would like to emphasis that the law of succession (and who has the right to inherit) depends on the law to be applied.

You wrote that your mother will inherit your father’s share. NOTE: This is not always true.

You said that your mother is Swedish citizen and the property is located in Italy. Thus the EU law (EU Regulation n. 650/12 ) must be taken into account.
In general, the law of the country where the deceased had her habitual residence at the time of death applies to the succession. This means that if the deceased had her habitual residence in Italy, Italian law applies. In any case, a will allows you to choose which country’s law will apply to your inheritance.

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For example, if Italian law applies, then both you and your mother should inherit and not just your mother.

According to Italian law, if the heirs consist of a wife and a child, the “reserved share” is:

– the wife inherits 50% of the estate;

– the child inherits 50% of the estate.

If the heir consists of a wife and two children, the “reserved share” is:

– the wife inherits 1/3 of the estate;

– child 1 inherits 1/3 of the estate;

– child 2 inherits 1/3 of the estate.