International succession and Italian inheritance tax law

International succession represents a complex legal framework. In it, the rules of multiple jurisdictions and the tax systems of the countries involved intertwine. When a deceased person owns assets, real estate, or property rights located abroad, or when heirs reside in different countries, it becomes necessary to determine:

• which law applies;
• which court has jurisdiction;
• how inheritance taxes should be managed.
  

So it is necessary to understand when the Italian inheritance tax law is applicable in order to avoid double taxation.

In Italy, the matter is governed by Legislative Decree No. 346/1990. It is also known as EU Regulation No. 650/2021 (see dedicated infosheet). It introduced the European Certificate of Succession to facilitate the recognition of cross-border inheritances within the European Union (with the exception of the United Kingdom, Ireland, and Denmark, wich continue to apply their own national laws). 

Italian inheritance tax law in an international succession

Article 2 of the Italian TUSD distinguishes two tax regimes depending on the deceased’s (de cuius) tax residence at the time of death:

Inheritance tax in case of a de cuius resident in Italy

Consider the case of an Italian citizen, resident in Modena, who passes away leaving:

• an apartment in Modena;

• a bank account in Germany;

• and financial securities held through a Luxembourg-based intermediary.

Heirs: a son permanently residing in Argentina, and the spuse residing in Italy.  

In this case of international succession, the principle of worldwide taxation applies.  

Consequently, Italian inheritance tax law will cover both assets located in Italy and those held abroad. However, if inheritance tax has been levied on the foreign assets by another stat (for example, Germany or Luxembourg), the heirs may benefit from the tax credit provided for under Article 26 of the TUSD.

The fact that one of the beneficiaries (the son) resides abroad does not affect the scope of Italian inheritance taxation. The heir residing in Argentina is therefore required to pay the tax due on inherited assets. Possibily (and if necessary) thourgh a tax representative in Italy. 

Inheritance tax for non-resident deceased with assets in Italy and abroad  

Consider the case of a French citizen, tax resident in Paris, who dies leaving:   

• a property located in Tuscany;   

• a bank account in Italy;   

• and additional movable and immovable assets held in France and Spain.   

In this case, the principle of territoriality applies, meaning that taxation is limited to assets and rights located within Italian territory – i.e.. the Tuscan property and the Italian banck account. The taxi liability falls on the beneficiaries (even if they are non-residents), and the Italian Revenue Agency may exercise its taxing power only over assets located in Italy. 

Assets situated in France and Spain remain outsied the Italian tax scope and are taxable, if applicable, under the internal laws of those respective States.   

It is important to note that inheritance tax is not tied to a fiscal year but arises at a specific moment—namely, upon the death of the individual. This is confirmed by the Italian Revenue Agency in Circular No. 34/E/2022. The Agency clarified that the tax is payable at the time of each transfer of assets or rights, i.e., upon the opening of the succession (“entry taxation”).   

Assets Deemed to Exist in Italy according to the Italian inheritance tax law  

Article 2, paragraph 3 of the TUSD identifies assets and rights that are deemed to exist within Italian territory, regardless of the deceased’s residence. These include:   

1. assets and rights registered in Italian public registries and related usufruct or real rights;   
2. shares or quotas in companies, as well as participations in entities other than companies, having their registered office, place of management, or main business in Italy;   
3. bonds and other securities in series or bulk (other than shares) issued by the State or by companies and entities referred to in letter b); 
4. certificates representing goods located in Italy; 
5. credits, bills of exchange, promissory notes, and checks of any kind if the debtor, drawee, or issuer is resident in Italy;   
6. credits secured by property located in Italy, up to the value of such property, regardless of the debtor’s residence;   
7. goods in transit abroad destined for Italy or subject to temporary export customs regime.   

Calculation of inheritance and gift tax in an international succession  

Article 7 of the inheritance tax law TUSD establishes applicable tax rates and exemptions for inheritance and donations. Rates vary according to the degree of kinship between the beneficiary and the deceased:   

• 4%- for transfers to the spouse and direct descendants or ascendants (parents, children, grandparents, grandchildren, etc.), calculated on the portion exceeding €1,000,000 per beneficiary;   

• 6% – for transfers to siblings, on the portion exceeding €100,000 per beneficiary;   

• 6% – for transfers to relatives up to the fourth degree and relatives-in-law up to the third degree, calculated on the entire net value transferred, with no exemption;   

• 8% – for transfers to unrelated parties, calculated on the entire net value transferred, no exemption.   

For transfers to individuals with severe disabilities (Article 3, paragraph 3, Law No. 104/1992), a €1.5 million exemption applies. The tax is levied only on the value exceeding that amount.   

News: double exemption   

Recently, the Provincial Tax Commission of Florence (Decision No. 157/2022) ruled that the aggregation of lifetime donations and estate assets is entirely abolished. Therefore, two distinct and independent exemptions apply: one for gift tax and one for inheritance tax. This position had already been confirmed by the Court of Cassation (Judgments Nos. 2273/2020 and 10255/2020) and was codified by Legislative Decree No. 139/2024, effective for successions opened on or after 1 January 2025.   

Under the new regime, the taxpayer must self-assess the tax when filing the inheritance declaration. The payment is due within 90 days from the filing deadline.   

Business Succession Benefits and Italian inheritance tax law   

Legislative Decree No. 139/2024 (see our dedicated article) implements the recommendations of the European Commission (94/1069/EC of 1994 and 98/C 93/02 of 1998), which encouraged Member States to minimize the tax burden on both direct and indirect transfers of businesses and business branches.   

The decree introduces a preferential tax regime for business succession, applicable to transfers mortis causa or through donations, family pacts, or trusts.   

Article 3, paragraph 4-ter of the TUSD, as amended by Decree No. 139/2024, provides that transfers to descendants and the spouse of businesses or business branches, shares, or corporate participations—including those made via family pacts (Articles 768-bis et seq. of the Civil Code) — are exempt from inheritance and gift tax.   

The legislator further clarified that the requirement of business activity continuity applies only to the transfer of an enterprise—not to the transfer of shareholdings. Consequently, the transfer of a pure holding company, a real estate company for mere asset management, or a simple partnership can also benefit from the exemption, provided the statutory conditions are met.   

The beneficiary must formally undertake, at the time of succession or donation, to maintain ownership and operational continuity for at least five years.   

Avoiding Double Inheritance Taxation in an international succession  

From a tax perspective, international succession is harmonized under EU Regulation No. 650/2012 (see our dedicated article). However, national laws and bilateral treaties between States continue to apply.   

To prevent double taxation on inherited assets, Italy has concluded seven bilateral agreements following the OECD Model Convention. The involved countries are: the United States, Sweden, Greece, the United Kingdom, Denmark, Israel, and France (the latter also covering gift tax).   

Double taxation may occur in cross-border successions, for example:   

• when the foreign State applies the lex rei sitae principle (as in the United  

Kingdom, which levies a 40% Inheritance Tax on worldwide assets, as per the UK Finance Bill 2025);   

• when the foreign State adopts the worldwide taxation principle, taxing foreign assets if the heir or donee is resident there (as in France or Germany).   

Without a bilateral tax treaty, the issue may be resolved through the domestic tax credit. It is regulated by Article 26(1)(b) of Legislative Decree No. 346/1990.   

When Foreign Taxes regarding an international succession  become an Italian Tax Credit   

According to paragraph 1, letter b) of Article 26 of the TUSD, the amount of inheritance tax due in Italy must be reduced by the amount of tax paid abroad on assets located in that foreign State. The deduction is allowed up to the portion of the Italian inheritance tax proportional to the value of those same assets, unless otherwise provided by any applicable treaties or international agreements.  

To qualify for the tax credit:  

• the foreign tax must be comparable to an equivalent Italian tax;  

• the assets must be located abroad;  

• the foreign tax must have been effectively paid.  

In summary, international succession requires careful coordination between domestic and international rules to correctly determine the applicable law, jurisdiction, and taxes due. Recent reforms aim to simplify compliance procedures, support family business continuity, and ensure tax fairness by preventing double taxation. In this context, the Italian inheritance regime often proves more advantageous from both a fiscal and administrative standpoint. Therefore, estate and succession planning rooted in Italy are highly desirable.  

News for 2026

In conclusion, it should be noted that Legislative Decree No. 123 of 1 August 2025 has significantly intervened in the field of succession law. with particular regard to the Consolidated Act on Successions and Donations (Legislative Decree No. 346/1990), with the aim of updating its content and making it more consistent with the current regulatory and economic framework.

The decree will enter into force on 1 January 2026.

An in-depth article will investigate the most significant innovations. The reason is that they are expected to have a concrete impact on taxpayers’ estate planning.