ITALY Law and Practice Contributed by: Paolo Ludovici and Andrea Mirabella, Gatti, Pavesi, Bianchi, Ludovici
Capital gains arising from the transfer of urban real estate units used as the main residence of the sell - er or his/her family members for most of the period between purchase and transfer are exempt from taxa - tion, even if sold within five years from the purchase. Rental Income Individuals may elect for the s . c . cedolare secca , a substitute tax replacing personal income tax, regional and municipal surcharges, and the registration and stamp duties otherwise due on residential lease agreements. The applicable rate is 21% for ordinary leases and 26% for short-term leases (reduced to 21% for one lease designated by the taxpayer). For the s . c . can- one concordato leases under Law No 431/1998, the substitute tax is reduced to 10%. 1.6 Stability of Tax Laws Italian tax legislation is generally stable and provides a high degree of certainty for taxpayers. The key features that make Italy attractive to private clients – including the Flat Tax Regime, tax incentives for inbound workers, relatively low inheritance and gift taxes, and the absence of a comprehensive wealth tax – are not expected to change in the short term. Legal certainty is further reinforced by the Statute of Taxpayers’ Rights (Law No 212/2000), which generally prohibits the retroactive application of tax legislation. Moreover, where tax regimes are granted for a fixed period, subsequent legislative changes are typically accompanied by grandfathering provisions protecting existing beneficiaries. 1.7 Transparency and Increased Global Reporting Italy has implemented various measures in line with international initiatives, such as: • OECD Common Reporting Standard (CRS) – pro - viding for the automatic exchange of financial account information between participating jurisdic - tions. • Foreign Account Tax Compliance Act (FATCA) – implemented through the Italy-US Model 1 Inter -
governmental Agreement, requiring the reporting of financial accounts held by US persons. • EU Directive DAC 6 – introducing mandatory reporting and automatic exchange of information in relation to cross-border tax arrangements, digital platforms and crypto-assets. • Public Registers of Beneficial Ownership (“UBO Register”) – Italy introduced public registers of beneficial ownership to improve transparency of corporate ownership and prevent money launder - ing. Trusts are among the entities subject to report - ing obligations. 2. Succession 2.1 Cultural Considerations in Succession Planning Italy’s economy is largely characterised by family- owned businesses, making succession planning a key issue. Family Constitutions are increasingly used to define shared values and governance principles, facilitating intergenerational transitions. Although Wills and other succession planning tools are well established under Italian law, they remain under-utilised. In practice, many entrepreneurs post - pone succession planning until a crisis arises, increas - ing the risk of family and inheritance disputes. 2.2 International Planning The internationality of assets and families requires an analysis of the civil and tax laws of the jurisdictions involved, as well as the composition of the family. Aspects to consider include: • the opportunity to benefit from double taxation treaties; • reporting requirements (CRS, FATCA, and UBO Register); and • the laws applicable to marriage, divorce and inher - itance (eg, Italy has adopted both EU Succession Regulation No 650/2012 and EU Regulation No 2016/1103 on matrimonial property regimes).
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