“Inbound” taxation : an opportunity for the Trust

The 2024 Italian tax reform introduced significant changes in the tax treatment of trusts. Under the new provisions, the tax on transfers of assets and rights to the beneficiaries of a trust will, as a general rule, be levied at the time of the actual transfer, subject to declaration by the beneficiaries themselves.
However, the settlor of the trust (or the trustee, in the case of a testamentary trust) will have the option to opt to pay the tax in advance. This option can be exercised at the time of each contribution of assets and rights to the trust or at the opening of the succession.
By opting for immediate taxation, the tax base, deductibles and applicable rates will be those in effect at the time of the contribution to the trust.
Once the tax is paid in advance, the actual transfer of the assets to the beneficiaries will not be subject to further taxation and it will not be possible to claim a refund of the tax already paid. This possibility is extremely attractive for all contributions characterized by assets whose value will grow over time and with beneficiaries already identified.
The reform offers the settlor of the trust greater flexibility in managing the tax, allowing the settlor to choose between immediate payment of the tax and deferred payment when the assets are actually transferred to the beneficiaries.

The proposed draft decree, pending the opinions of the Finance Committees of the House and Senate, marks further progress in defining the tax rules for trusts, an institution increasingly appreciated and used for estate planning.

Our staff remains available to provide you with more information on this issue.