Indirect gifts are a topic that is frequently underestimated and a source of potential disputes with the tax authorities. The Court of Cassation has recently provided new guidance on the subject, clarifying the moment from which the limitation period for tax assessment begins to run, particularly when indirect gifts come to light following a voluntary disclosure procedure. Below you will find a series of frequently asked questions.
What does it mean that the tax authority’s time limit is triggered by the Voluntary Disclosure in the case of an indirect gift?
The Court of Cassation, in judgment no. 18724/2024, has established that the limitation period for tax assessment in respect of a taxable indirect gift runs from the voluntary declaration that brings it to light (for example a Voluntary Disclosure), and not from the date of the gift itself.
When does an indirect gift become taxable under current legislation?
Pursuant to Article 56-bis of Legislative Decree no. 346/1990, indirect gifts become taxable in two circumstances:
- where they emerge from declarations made in the course of tax proceedings;
- where they give rise to increases in net assets exceeding the tax-free thresholds (€1.5 million for recipients with a severe disability, €1 million for spouses or relatives in the direct line, €100,000 for brothers or sisters).
Who may make the declaration that brings an indirect gift to light?
The Court of Cassation clarifies that the declaration may originate from either the donor or the recipient and may also arise from a request for voluntary cooperation, particularly where it concerns financial or other assets held abroad that have not been declared.
What is the time limit for the notice of assessment of gift tax on indirect gifts?
The time limit for the notice of tax assessment is 5 years and runs from the voluntary declaration, not from the moment at which the liberality was made.
Conclusion
The recent judgment of the Court of Cassation specifies that, in the context of indirect gifts, the date from which the limitation period for the tax authority begins to run is the moment at which the gift is declared (including by way of Voluntary Disclosure), and not the date on which it was made. This position has a material impact on the time frames for tax assessments and must be borne in mind by anyone who makes or receives an indirect gift. Contact me for any queries or further information.