Four per cent is the rate of Italian inheritance tax for a spouse and for relatives in the direct line, and it applies only to the part of what each heir receives that exceeds €1,000,000.
The allowance belongs to the individual who inherits, not to the estate as a whole, and that is the detail that matters most: an estate of €3,000,000 left in equal shares to a spouse and two children produces no inheritance tax, because none of the three crosses their own threshold. [1]
Above the threshold the arithmetic is linear. A child who receives €1,400,000 pays 4 per cent on €400,000, which is €16,000. For brothers and sisters the rate rises to 6 per cent, with an allowance of €100,000 each; for other relatives up to the fourth degree and for relatives by marriage in the direct line, 6 per cent applies with no allowance; for anyone else, including an unregistered partner, the rate is 8 per cent on the whole amount. Where the beneficiary is a person with a severe disability, the allowance rises to €1,500,000 whatever the family relationship. [1]
The figures sit in Article 7 of the Italian Inheritance and Gift Tax Code (Testo unico dell'imposta sulle successioni e donazioni, Legislative Decree 346/1990), in the version rewritten by Legislative Decree 139/2024 and in force since 1 January 2025.
A caution for anyone reading the sources directly: the new consolidated code on indirect taxes, Legislative Decree 123/2025, repeats them word for word, but its application has been postponed to 1 January 2027, so a reader today is reading a text that does not yet apply. [1][2]
The second determinant is the value to which the 4 per cent applies, and for property that value is not the market price. It is the cadastral value: the notional rent (rendita catastale) shown on the land registry extract (visura catastale), uprated by 5 per cent and multiplied by 120, or by 110 where the heir qualifies for main-home relief (prima casa).
A villa near the coast that would sell today for €900,000 often carries a rendita of around €1,500; 1,500 × 1.05 is 1,575, and × 120 is 189,000. The tax is computed on that value, and if the heir declares at least that figure the Agenzia delle Entrate (Italian Revenue Agency) cannot revise it. Anyone with the extract in hand can do the sum in two minutes, and usually finds the house alone uses up less than a fifth of the allowance. [3]
On €189,000, 4 per cent would be €7,560; with the allowance, nothing.
Beyond inheritance tax there are two further charges almost nobody mentions: the mortgage registration tax (imposta ipotecaria) at 2 per cent and the cadastral tax (imposta catastale) at 1 per cent, both levied on the cadastral value and both due even when inheritance tax itself is zero. On the villa above they come to €3,780 plus €1,890, which is €5,670, payable before the transfer of title can be recorded. If at least one heir qualifies for main-home relief, and qualifies for it in Italy, both fall to a fixed €200 each. That is why a zero-tax succession still costs something. [4]
Article 2 of the same Code anchors the tax to the residence of the deceased: a person resident in Italy at death is taxed on all assets wherever they are, so the London account and the Munich flat come in too; a person not resident in Italy is taxed only on assets located in Italy. For someone who owns a house in Sardinia without having moved, the Italian succession concerns that house and nothing else. For someone who has moved, the 4 per cent and the per-heir allowance extend to the whole estate, and tax paid abroad on foreign assets is credited against the Italian tax, but only that. [5]
To a foreign reader these numbers look trifling, and they are.
In the United Kingdom the rate is 40 per cent above a £325,000 threshold that attaches to the whole estate, not to each heir, with only the spouse exempt; in France the direct line pays in bands rising to 45 per cent, with an allowance of €100,000 per child; in Germany the allowance per child is €400,000 and the rates climb from 7 to 30 per cent. These are matters of foreign law, to be confirmed with a local adviser, but the structural gap is obvious: a threshold per person rather than per estate, a single rate rather than a progressive scale, a cadastral base rather than a market one. [6]
Take a typical case. A foreign couple buy in Gallura and remain resident in their own country; when one of them dies, the family goes to the notary at home, settles the estate under the rules at home, and only on trying to sell or re-register the Sardinian house learns that Italy has a separate inheritance tax return (dichiarazione di successione), to be filed electronically within twelve months of the death even when the tax is zero, because there is a property. By then the twelve months have passed, and late regularisation costs penalties and interest. The right order is the reverse: open the Italian file first, then coordinate the rest. [7]
Since 1 January 2025 the tax is no longer assessed by the tax office but self-assessed by the heirs in the return, and it is payable within ninety days of the filing deadline: in practice up to fifteen months from the death, with the option of 20 per cent at once and the balance in quarterly instalments. The Agenzia delle Entrate checks afterwards. The reform also abolished the aggregation of lifetime gifts (coacervo successorio): lifetime gifts are no longer added back to the estate to erode the allowance, so a child who received €600,000 in 2019 keeps the full €1,000,000 intact on the parent's death. For gifts between living persons the aggregation remains, and should be borne in mind before giving. [7][8]
This arrangement is not stable, and it pays to know it. The €1,000,000 allowance is the same as in 2006 and twenty years of inflation have thinned it; the tax was abolished in 2001 and reintroduced in 2006, and what Parliament has done twice it can do a third time. And the 4 per cent is only the Italian side: the heirs' home State, if it still regards them as its taxpayers, may tax the same house a second time, and the Italian credit does not cover that case. [5]
Before any planning, then, with the documents in hand: obtain the land registry extract for every Italian property and work out the cadastral value with the formula above; count the heirs and attribute to each their share, because the allowance is measured person by person; check where the person leaving the estate is resident today, and where those receiving it are.
Sources
[1] Legislative Decree 346 of 31 October 1990 (Testo unico dell'imposta sulle successioni e donazioni, TUS), Article 7, paragraphs 1 and 2, as replaced by Article 1, paragraph 1, of Legislative Decree 139 of 18 September 2024, with effect from 1 January 2025. Reintroduction of the tax: Decree-Law 262 of 3 October 2006, Article 2, paragraphs 47-53, converted by Law 286 of 24 November 2006. Earlier abolition: Law 383 of 18 October 2001, Article 13.
[2] Legislative Decree 123 of 1 August 2025 (Testo unico delle disposizioni legislative in materia di imposta di registro e di altri tributi indiretti), Part III. Postponement of application to 1 January 2027: Decree-Law 200 of 31 December 2025, Article 4, paragraphs 1-5, converted by Law 26 of 27 February 2026.
[3] TUS, Article 34, paragraph 5 (automatic valuation, by reference to Article 52, paragraphs 4 and 5, of Presidential Decree 131 of 26 April 1986); Law 662 of 23 December 1996, Article 3, paragraph 48 (5% uprating of cadastral rents); Law 350 of 24 December 2003, Article 2, paragraph 63, and Decree-Law 168 of 12 July 2004, Article 1-bis, paragraph 7 (multipliers raised to 110 and 120).
[4] Legislative Decree 347 of 31 October 1990 (Testo unico delle imposte ipotecaria e catastale), Articles 1, 2 and 10 and attached Tariff (2% and 1%, minimum €200 each); Law 342 of 21 November 2000, Article 69, paragraph 3 (fixed €200 where the main-home conditions are met).
[5] TUS, Article 2, paragraphs 1 and 2 (territorial scope) and Article 26, paragraph 1, letter b) (credit for tax paid abroad on assets located there).
[6] Foreign law, to be confirmed jurisdiction by jurisdiction: United Kingdom, Inheritance Tax Act 1984, nil-rate band of £325,000 and 40% rate; France, Code général des impôts, Articles 777 and 779; Germany, Erbschaftsteuer- und Schenkungsteuergesetz, §§ 16 and 19.
[7] TUS, Article 28 (electronic filing), Article 31 (twelve-month deadline), Article 33 (self-assessment and payment within ninety days of the filing deadline) and Article 38 (instalments with a 20% down payment); Agenzia delle Entrate, Circular 3/E of 16 April 2025.
[8] TUS, Article 8, paragraph 4, repealed by Article 1 of Legislative Decree 139/2024 (aggregation of gifts on death); Article 57 (aggregation for gift tax purposes only).
Agostino Galizia, chartered accountant and statutory auditor in Cagliari, Sardinia. Registered with the Ordine dei Dottori Commercialisti ed Esperti Contabili di Cagliari (no. 1330/A) and the Italian register of statutory auditors (no. 80487). Galizia & Pinna Associati S.r.l. STP.
For anyone who wants a figure rather than an explanation, the firm prepares a succession exposure map: a written estimate of the inheritance tax due on Italian and foreign assets, in the current scenario and after a possible move of residence to Italy, with a defined scope and a fee agreed before work begins.
This article is for information only and is not a substitute for advice on your specific circumstances.
