ITALY Law and Practice Contributed by: Paolo Ludovici and Andrea Mirabella, Gatti, Pavesi, Bianchi, Ludovici
Real estate Real estate located in Italy is subject to Municipal Property Tax (IMU), a local tax applied to property ownership. Rates and exemptions vary depending on the municipality and the cadastral category of the property (with full exemption for the main abode; see 1.2 Exemptions ). Real estate located abroad is subject to tax on the value of real estate abroad (IVIE) at a rate of 1.06% applied on the purchase cost, if available, or the market value. With reference to real estate located in EU countries or EEA countries that guarantee an adequate exchange of information, the value is the cadastral value as determined and revalued in the country in which the real estate is located for the pur - pose of the local property or income taxes. Financial investments Financial investments located in Italy are subject to a 0.2% stamp duty ( imposta di bollo ). Savings/deposits are taxed at EUR34.20. Financial investments located abroad are subject to tax on the value of financial assets (eg, stocks of for - eign listed companies and units of UCIs) held abroad (IVAFE) at 0.2% (0.4% if the financial assets are held in a “black list” jurisdiction). Savings/deposits are taxed at EUR34.20. Tax Monitoring Obligations on Foreign Assets Selected financial and non-financial assets held abroad are to be reported in a special section of the annual income tax return (the so-called “RW Form”). Foreign assets to be reported in the RW Form include (inter alia): • holdings in the capital or equity of non-resident entities (eg, foreign companies and legal entities such as foreign foundations and foreign trusts); • contracts of a financial nature entered into with non-resident counterparties, including loans and life insurance policies taken out with foreign insur - ance companies; • real estate; • precious metals; and • artworks.
Italian Inheritance and Gift Tax As a general principle, if a deceased/donor was an Italian tax resident at the time of his/her demise/dona - tion, Italian inheritance and gift tax applies to the value of the transferred assets wherever they are located (worldwide taxation principle). Italian taxation applies also in case of transfer of assets located in Italy if the deceased/donor was not resident in Italy. The obligation to pay Italian inheritance/gift tax lies on the beneficiaries of the transferred assets, regard - less of their residence, and the applicable tax rates are determined on the basis of the degree of kinship between the deceased/donor and the beneficiary, with certain relevant allowances, as follows: • 4%, on amounts exceeding EUR1 million for spouses and direct descendants and ascendants; • 6%, on amounts exceeding EUR100,000 for sib - lings; • 6% rate, with no tax-exempt threshold, for other relatives up to the fourth degree and in-laws up to the third degree; • 8% rate, with no tax-exempt threshold, for all other recipients; and • 4%, 6% or 8% depending on the relationship of kinship with the deceased/donor, on amounts exceeding EUR1.5 million, for transfers to a person with a disability. Double Taxation Relief and Double Taxation Treaties Domestic law provides for a tax credit for taxes paid abroad by Italian residents under the following condi - tions: • earning of income produced abroad; • contribution of foreign income to the formation of total income; and • payment of foreign taxes outright. Italy has an extensive network of double taxation treaties for income tax purposes, the vast majority of which provide for the tax credit method of eliminating double taxation. Italy has entered into six double taxation treaties for inheritance tax purposes (with Denmark, the United
290 CHAMBERS.COM
Powered by FlippingBook