Inheritance Tax in Italy: Rates, Exemptions, and the 2025 Self-Assessment Rules

Italy's inheritance tax system changed fundamentally on January 1, 2025. Under the new regime, heirs must calculate and pay their own tax liability — the tax authority no longer does it for you. For English-speaking heirs unfamiliar with Italian cadastral valuations, franking thresholds, and fixed-duty calculations, self-assessment creates serious risk of either overpaying or triggering penalties for underpayment.

Here's how the system actually works.

Tax Rates by Relationship

Italian inheritance tax (imposta di successione) applies nationally with uniform rates across all regions. The rate depends entirely on the heir's relationship to the deceased:

Spouse, children, direct descendants: 4% on the value exceeding a €1 million exemption per beneficiary. Below that threshold, zero inheritance tax.

Siblings: 6% on the value exceeding a €100,000 exemption per beneficiary.

Other relatives (up to the 4th degree): 6% with no exemption — taxed from the first euro.

Unrelated individuals and unmarried partners: 8% with no exemption. This includes de facto partners who lived together for decades but never formalized a civil union. Under Italian law, they're treated as strangers to the estate for tax purposes.

How Real Estate Is Valued

This is where the system works in the heir's favor. Italian real estate is taxed on its valore catastale (cadastral value), not its market value. Cadastral value is calculated by multiplying the property's registered cadastral yield (rendita catastale) by standard legal multipliers.

The result is typically 30% to 40% below actual market value, which significantly reduces the taxable estate.

On top of inheritance tax, real estate transfers trigger two additional fixed-percentage taxes:

• Mortgage tax (imposta ipotecaria): 2% of cadastral value
• Cadastral tax (imposta catastale): 1% of cadastral value

Primary residence benefit (prima casa): If a beneficiary inherits a property that will be their primary residence, both mortgage and cadastral taxes drop to a flat €200 each — a significant saving on high-value properties.

What's Exempt

Several asset categories are completely excluded from the taxable estate:

• Italian government bonds (BOTs, CCTs, BTPs) and equivalent EU sovereign debt
• Life insurance policy payouts
• Public pension rights (INPS survivor pensions)
• Funeral expenses are deductible up to €1,550
• Medical expenses incurred in the deceased's last six months of life
• Documented debts of the deceased

The 2025 Self-Assessment Revolution

Before 2025, heirs filed the Dichiarazione di Successione and waited months for the Agenzia delle Entrate to calculate the tax bill. Under Legislative Decree 139/2024, heirs now must:

1. Calculate their own tax liability based on cadastral values, asset inventories, and relationship-based rates
2. File the declaration within 12 months of death
3. Pay all self-assessed taxes within 90 days of filing

Payment options: a single lump sum, or installments — up to 8 quarterly payments for amounts under €20,000, or 12 quarterly payments for higher amounts. Installment plans require a 20% down payment at the time of filing.

The reform also abolished coacervo successorio — the old rule that added lifetime gifts to the estate when calculating whether an heir had exceeded their tax-free allowance. Gift and inheritance exemptions are now entirely separate. A parent can give a child €1 million in lifetime gifts and leave them another €1 million via inheritance, with both amounts falling within their respective exemptions — €2 million total, tax-free.

Late Filing Penalties

The penalties are cumulative and start accruing from the date of death, not the filing deadline:

• 1-90 days late: 1.5% to 1.67% of total tax due
• 91-365 days late: 3.75% penalty
• Beyond one year: 4.29% to 5% penalty

Daily interest compounds on top of these percentages. Banks also refuse to process any asset releases while outstanding penalties exist, creating a double bind where the estate is locked up precisely when heirs need access to pay the tax.

Filing Without a Tax Code

Foreign heirs who lack an Italian fiscal code (Codice Fiscale) can still file the succession declaration. The Agenzia delle Entrate allows substitution of the missing fiscal codes with the heirs' full names, dates and places of birth, and foreign residential addresses.

However, foreign heirs without SPID digital identity cannot access the filing portal directly. They must delegate the filing to an authorized intermediary — a notary, certified accountant (commercialista), or national assistance center (CAF).

Filing Exemptions

Not every estate requires a tax declaration. Heirs are exempt from filing if all three conditions are met:

1. The estate is valued under €100,000
2. The estate contains no real estate or real property rights (such as usufruct)
3. The estate passes entirely to a spouse or direct descendants

If any condition is not met — even one small real estate holding — the full declaration and self-assessment process is mandatory.

The Italy expat death guide includes a step-by-step self-assessment walkthrough with cadastral value calculation methods, rate tables, and worked examples for common family structures.

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