ITALY Law and Practice Contributed by: Paolo Ludovici and Andrea Mirabella, Gatti, Pavesi, Bianchi, Ludovici
2.6 Transfer of Assets: Vehicle and Planning Mechanisms The Italian legal and tax system provides some tools that allow taxation on transfers of assets to be reduced or postponed, if not eliminated altogether. Donation of Bare Ownership The usufruct is a right in rem of enjoyment of another person’s property, consisting of the right of a person to enjoy an asset owned by another person and to col - lect its benefits/profits/proceeds, under the obligation not to alter its economic use. Such a right is limited in time and cannot exceed the life of the usufruct holder. The owner of an asset may transfer bare ownership to others, retaining for him-/her-self the right of usu - fruct. Upon expiry of the agreed term or the death of the usufruct holder, the bare owner becomes the full owner of the asset. The value of bare ownership of a property corresponds to the total value of full ownership, less the value of the usufruct right, calculated according to certain criteria. From an inheritance/gift tax standpoint, the taxable base is equal to the value of the full ownership less the value of the usufruct. The future consolidation of bare ownership with usufruct upon death of the usu - fruct holder will not represent a taxable event for the Life insurance policies are, to a certain extent, tax- efficient in Italy and are increasingly being used as investment/wealth planning vehicles. Income taxation is deferred at the time of the partial or full surrender or at the time of the payment to the beneficiary. However, no income tax is levied on the portion referred to demographic risk of the policy. In case of death of the insured person, the amount paid to the beneficiaries is collected out of inheritance rules and consequently is excluded from inheritance tax. beneficiary/bare owner. Life Insurance Policy
Trusts Trusts are vehicles for preserving family assets for future generations. Italy is a trust-friendly jurisdiction both from a civil law perspective – recognising asset segregation (see 3.2 Recognition of Trusts ) – and from a tax perspective (see 1.1 Tax Regimes ). Trusts are recognised and enforced in Italy by virtue of the Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition, ratified under Law No 364 of 16 October 1989, which came into force on 1 January 1992 (the “Hague Convention”, see section 3.2 Recognition of Trusts ). Transfers of Businesses and Corporate Shareholdings Through Family Pacts (Patti di Famiglia) A family pact ( patto di famiglia ) is an agreement whereby an entrepreneur or shareholder transfers, while alive, his/her enterprise/shareholdings to one or more of his/her heirs. The family pact shall be executed in the form of a pub - lic deed, by and among the entrepreneur/shareholder, his/her spouse (or civil union partner) and any other person that could be considered heir of intestacy in his/her respect, should the entrepreneur/shareholder have died at the time of the family pact’s execution. The parties to whom the enterprise/shareholding expressly devolves by means of the family pact shall pay to the other parties a sum equal to their com - pulsory portion, unless the other parties waive their right to such payment. The goods received by each party are imputed to the compulsory portion of the relevant party and are exempt from re-integration and/ or reduction. A transfer of enterprise or shareholdings may ben - efit from the exemption from inheritance and gift tax provided by Article 3, paragraph 4-ter, TUS (see 1.2 Exemptions ). 2.7 Transfer of Assets: Digital Assets Circular Letter No 30/E of 27 October 2023 of the Ital - ian tax authorities clarified that gratuitous transfers of crypto-assets are relevant for the application of inher - itance and gift tax.
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