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With Response No. 165/2026, the Italian Revenue Agency clarified how to determine the income arising from a foreign transparent trust in relation to a resident beneficiary, pursuant to Article 44(1)(g-sexies) of the Italian Income Tax Code (TUIR): trust assets distributed to resident beneficiaries do not constitute income, and income arising from the assets received must be taxed from the moment the Italian resident becomes a beneficiary. By contrast, the presumption under Article 45(4-quater) of the TUIR, which applies to distributions from foreign opaque trusts, does not apply.
The Case
The case concerns a US citizen who is a tax resident in Italy and became a beneficiary, following her mother’s death in 2025, of a trust established in the United States.
According to the facts set out in the request, the trust was fiscally interposed to the parents until the mother’s death and only subsequently became transparent with respect to the children-beneficiaries. The applicant asked the Italian Revenue Agency how to determine the trust income to be taxed in Italy.
The Agency clarified that the classification of the trust was not the subject of the ruling request, and therefore assumed as a premise that the trust was transparent following the settlor’s death.
The Taxation of Transparent Trusts
Under Article 73(2) of the TUIR, where the beneficiaries of a trust are identified, the income earned by the trust is attributed directly to them, in proportion to the share provided for in the trust deed or, failing that, in equal shares.
An identified beneficiary is a person who, in addition to being specifically identified, holds the right to claim payment of the income allocated to them from the trustee. Such income constitutes investment income under Article 44(1)(g-sexies) of the TUIR. In the case of a non-resident transparent trust with a beneficiary resident in Italy, the income earned by the trust as a whole and attributable to the beneficiary is relevant, even if earned outside Italian territory.
Determining the Income of the Foreign Trust
Referring to Circular Letter No. 34/E of 2022, the Agency reiterated that, in order to determine the income of a non-resident transparent trust to be attributed to the Italian beneficiary, account must be taken of the rules under the tax legislation of the State where the trust is resident or established. By contrast, Article 45(4-quater) of the TUIR does not apply — under that provision, where it is not possible to distinguish between capital and income in distributions from foreign trusts, the entire amount received is treated as income.
The Agency noted that this provision applies, in principle, to distributions made by foreign opaque trusts established in low-tax jurisdictions, and not to transparent trusts with identified beneficiaries.
The Italian Revenue Agency’s Clarification
Starting from the 2025 tax year, the applicant, as the identified beneficiary of a foreign transparent trust, is required to report in Italy the share of trust income attributable to her, regardless of whether it is actually distributed. The relevant income must be determined in accordance with the tax rules of the State where the trust is resident or established — in this case, the United States — and will constitute investment income for the resident beneficiary under Article 44(1)(g-sexies) of the TUIR. By contrast, Article 45(4-quater) of the TUIR, which applies in principle to distributions made by foreign opaque trusts established in low-tax jurisdictions, does not apply.
Finally, the reporting obligations for foreign assets and, where applicable, IVIE and IVAFE on real estate and financial assets held abroad remain applicable.