ITALY Law and Practice Contributed by: Paolo Ludovici and Andrea Mirabella, Gatti, Pavesi, Bianchi, Ludovici
purchase and sale (see 1.5 Taxation of Real Estate Owned by Non-Residents and Non-Citizens ); • 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). The ONLUS regime will be repealed with effect from the first tax period com - mencing after 31 December 2025. From the same date, the Third Sector Code provides an exemption from inheritance and gift tax, as well as mortgage and cadastral taxes on real estate transfers, for gratuitous transfers to Third Sector entities, provid - ed the assets are used exclusively for their statu - tory civic, solidarity and social utility purposes. • 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, provides that transfers of businesses and shareholdings in companies and partnerships to spouses or descendants are exempt - ed 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. 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. Tax Step Up of the Value of Shareholdings and Lands for Capital Gains Tax Purposes The 2025 Budget Law (Law No 207 of 30 Decem - ber 2024) introduced, effective as of 1 January 2025, the option to revalue the tax cost of shareholdings, whether listed or unlisted. In summary, with respect to shares and equity inter - ests held as at 1 January of each year, the legislation permits individuals, simple partnerships, non-com - mercial entities, and non-resident persons without a permanent establishment in Italy to adjust the pur - chase cost or acquisition value – relevant for the cal - culation of taxable capital gains – by paying a substi - tute tax at the rate of 21% no later than 30 November of the same year. With effect from 1 January 2026, the 2026 Budget Law increased the substitute tax rate from 18% to 21%.
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