ITALY Law and Practice Contributed by: Paolo Ludovici and Andrea Mirabella, Gatti, Pavesi, Bianchi, Ludovici
1.2 Exemptions Exemptions From Income Tax and Property Taxes The main exemptions from income and wealth taxes include: • the exemption on capital gains on the sale of prop - erties held for more than five years (see 1.1 Tax Regimes and 1.4 Taxation of Real Estate Owned by Non-Residents ); • the exemption on capital gains on the sale of prop - erties received by succession (see 1.4 Taxation of Real Estate Owned by Non-Residents ); • the exemption on capital gains on the sale of properties used as a main residence by the seller and his/her family for most of the period between purchase and sale (see 1.4 Taxation of Real Estate Owned by Non-Residents ); • the exemptions from IMU for the main residence and certain types of properties (such as agricultural land and buildings used for cultural purposes); and • the exemptions provided for individuals who transfer tax residence by benefiting from one of the special regimes described in 1.1 Tax Regimes . Various objective and subjective exemptions are pro - vided from inheritance and gift tax. Legislative Decree No 346 of 31 October 1990 (Italian Consolidated Act on Inheritance and Gift Tax, TUS) provides for the fol - lowing: • transfers in favour of the state or a territorial public entity; Inheritance and Gift Tax Exemptions Objective and subjective exemptions • transfers in favour of a non-territorial public entity; • transfers in favour of a recognised foundation or association with public utility purposes; • transfers in favour of non-profit organisations of social utility (ONLUS); and • transfers in favour of specific entities such as banking foundations, non-governmental organisa - tions and philanthropic entities. TUS provides that certain assets – such as Italian government bonds and cultural heritage assets – are excluded from the hereditary estate and not counted for the purposes of the taxable base of the inherit - ance tax.
Transfers of businesses and corporate shareholdings
Article 3, paragraph 4-ter, TUS, as amended by Legis - lative Decree No 134/2024, provides that transfers of businesses and shareholdings in companies and part - nerships to spouses or descendants are exempted from inheritance and gift tax provided that: • in the case of shares or equity interests in corpora - tions – the transferee must acquire control of the company or consolidate control already held, and is further required to undertake to maintain such control for a period of five years from the date of the transfer; • in the case of other equity interests (eg, holdings in partnerships) – the transferee must undertake to retain ownership of the interests for a period of no less than five years from the date of the transfer; and • for businesses – the recipient must commit to con - tinue the business activity for five years following the transfer. The exemption applies not only to shareholdings in companies incorporated in Italy but also to those held in companies resident in EU member states or the EEA states, as well as in jurisdictions that ensure an adequate exchange of information. Third-sector entities Gratuitous transfers to certain entities that qualify as “third-sector entities” – such as volunteer organisa - tions, social promotion associations and philanthropic entities – are exempt from inheritance and gift taxes provided that the donated assets are used to carry out the statutory activity for the exclusive pursuit of civic, solidarity and socially useful purposes. 1.3 Income Tax Planning General Considerations Depending on the type of income-generating assets, wealth structure, goals and family composition, the Italian system offers different solutions for income tax planning, while also having regard to an asset protec - tion perspective and succession planning.
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