ITALY, TRUST AND GIFT TAX: THE LATEST CASE-LAW BASIS

Regarding the taxation of trusts, for gift tax purposes, Italian Supreme Court appears by now to be definitely settled in favour of the so-called “exit taxation”. The most recent sentences of the Judges, both for their numerical relevance and the light clarifying intention expressed, let us assume that also in the future this interpretative line will be hold.

Specifically, the basis for inheritance and gift taxation would result in the allocation of the assets and rights to the beneficiaries by the trustee, provided that the allocation appears in acts subject to registration or in acts which are, for tax purposes, registered voluntarily (for example in case of allocation of financial assets to a beneficiary, to avoid the risk of synthetic assessment letters from the Tax Authority on that income).

And not, as constantly sustained by the Italian Tax Authority, in the deed of gift of the trust (so-called “entry taxation”), which has to consequently be considered a tax-neutral act, not subject to inheritance and gift taxation.

In light of this, it is clear that the payments made according to the Italian Tax Authority’s interpretation appear to be unduly, devoid of objective condition and, anyway, made by a subject (the trustee) other than the real recipients of the tax (the beneficiaries). For those payments it may be submitted a request of refund in accordance and within the limits of article 42, paragraph 2, Tus.

We remain available for any clarification.