Exemption from Italian inheritance and gift tax also for holding companies

Administrative practices and case law have consistently demonstrated a restrictive interpretation of the scope of Article 3, paragraph 4-ter, of Legislative Decree No. 346/1990 (Provisions Concerning Inheritance and Donation Tax – TUS), in the sense that they do not recognize the exemption for transfers of shares, even if controlling, in so-called "non-operating" companies (such as static holding companies and companies solely holding real estate assets). In fact, they required as an additional condition the exercise of business activities.

With Legislative Decree No. 139 of 18 September 2024, titled "Provisions for the Rationalization of the Registration Tax, Inheritance and Donation Tax, Stamp Duty, and Other Indirect Taxes Excluding VAT", enacted in implementation of the principles set out in Article 10 of the enabling law for tax reform (Law No. 111 of 2023), the Italian legislator intervened by carrying out a comprehensive revision of inheritance and gift taxes, modifying the entire TUS.

In particular, Article 3, paragraph 4-ter TUS has been rewritten, and the new formulation now clearly distinguishes the requirements for benefiting from the exemption as follows:

a) For corporations, the acquisition or integration of control is required, along with its maintenance for at least 5 years;

b) For partnerships, the transfer (and maintenance for five years) of the "ownership" of the share is required;

c) For businesses and business branches, it is necessary that the transferees continue the business activity for at least 5 years;

d) Additionally, subject to the fulfillment of further requirements, transfers that allow for the "integration" of an already existing legal control, as well as transfers involving shares in foreign companies, EU and EEA companies, and companies resident in countries ensuring an adequate exchange of information (including Switzerland), are also relevant.

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