A trust is a legal instrument whereby one party (the settlor) transfers assets to a trustee, who manages them on behalf of one or more beneficiaries. The trustee does not become the owner of the assets, but administers them under a regime of patrimonial segregation.
When does inheritance and gift tax apply to a trust?
According to the Italian Revenue Agency (ruling no. 165 of 2024), inheritance and gift tax applies only at the moment the assets are definitively transferred to the beneficiaries. The deed establishing the trust and the transfer of assets from the settlor to the trustee do not give rise to a taxable event.
What happens to the trust assets if a beneficiary renounces?
If the beneficiary renounces the trust assets, these revert to the settlor and the trust ceases. The Italian Revenue Agency clarifies that such reversion does not constitute a transfer of wealth and is not subject to inheritance and gift tax.
What taxes apply upon revocation of the trust?
The deed of revocation of the trust is subject to a fixed-rate registration tax. In addition, mortgage and cadastral taxes are due, likewise at a fixed rate, for the transcription and cadastral transfer of the assets transferred.
How does the relationship between settlor and beneficiary affect taxation?
When assets are attributed to the beneficiaries, inheritance and gift tax is calculated on the basis of the degree of kinship between the settlor and the beneficiary, applying the relevant rates and allowances.
What tax advantages does a trust offer?
A trust makes it possible to plan succession and protect assets, deferring taxation to the moment of actual attribution to the beneficiaries and avoiding premature taxation on the assets settled into the trust.
With the support of an Independent Financial Adviser who works alongside dedicated professionals, it is possible to plan effectively for the future.