Italy

Italian domestic rules on the tax residence of individuals

According to Italian tax law, an individual is considered to be an Italian tax resident when, for the greatest part of the tax period (i.e., more than 183 days, or 184 days in leap years, even if not consecutive), also taking into account fractions of days, he/she:

• is physically present in Italy; or
• has his/her domicile, i.e., the place where the personal and family relationships of the individual are primarily located, in Italy; or
• has his/her residence in the Italian territory pursuant to the Italian Civil Code, defined as the place where an individual has his/her habitual abode, i.e., the place where the person usually physically stays and where he/she appears to be willing to stay; or
• is enrolled in the registry of the Italian resident population, unless proven otherwise.

These four requirements are alternatives and not concurrent, and the tax period corresponds to calendar years. No split-year treatment is provided by the domestic legislation, unless expressly set out in the relevant Double Tax Treaty entered into by Italy (e.g., the Double Tax Treaties entered into with Switzerland and Germany).

Ordinary personal income tax regime

Items of income. Italian tax resident individuals are subject to personal income tax (Imposta sul reddito delle persone fisiche (IRPEF)) in Italy based on their worldwide income. Conversely, non-resident individuals are taxed only on the income realised in Italy.

Individual income is classified into the following six categories:

• income from real estate;
• income from capital;
• employment income;
• self-employment income;
• business income; and
• miscellaneous income.

Applicable rates. As a general rule, the overall taxable income corresponds to the IRPEF taxable basis and is subject to the following progressive rates (that were last updated starting from the 2024 tax period and also confirmed for the 2025 tax period):

• up to EUR 28,000: 23%;
• over EUR 28,000 and up to EUR 50,000: 35%; and
• over EUR 50,000: 43%.

Certain regional and municipal surcharges apply to overall taxable income up to a rate of 4%.

The vast majority of investment and trading income is generally subject to a flat 12.5% or 26% substitute tax.

In addition, certain deductions and exemptions are provided (e.g., exemption of the capital gains derived from the sale of real estate assets held for more than five years).

Italian tax law does not provide for any exit tax for individuals.

Italian inheritance and gift tax regime

Italian tax law provides for inheritance and gift taxes (IHT), which apply to transfers of assets and rights as a result of death, gifts, or other gratuitous transactions.

Italian resident individuals are subject to IHT on transfers upon death or gifts of all assets, wherever located, while non-Italian resident individuals are subject to IHT only on Italian situs assets.

IHT applies at rates ranging from 4% to 8%, depending on the relationship between the deceased/donor and the heir/donee. Certain allowances are provided for close relatives (allowance of EUR 1,000,000 is provided for transfer in favour of the spouse, ascendants, and descendants).

As a general rule, the IHT taxable basis is the fair market value of the transferred assets, but different rules apply to specific assets (e.g., real estate assets).

Cadastral and mortgage taxes would be levied on any transfer of Italian situs real estate at a 3% aggregate rate, regardless of whether such transfers are exempt for IHT purposes.

For the sake of completeness, it is worth mentioning that the Italian legislator has recently amended Legislative Decree No. 346 of 31 October 1990 (hereinafter, the “Italian Inheritance and Gift Tax Act”) by adopting Legislative Decree No. 139 of 18 September 2024 which, starting from 1 January 2025, is aimed at reorganising, inter alia, the IHT system in Italy. According to the revised provisions:

• taxpayers will be required to autonomously and directly assess the IHT due (instead of waiting for the Italian tax authorities to determine and liquidate the amounts);
• there is an exemption regime from IHT in case of transfer of controlling shareholdings extended to transfers that integrate a pre-existing controlling shareholding; and
• the applicable allowances will apply separately for gifts and transfers upon death.

Such reform has introduced, for the first time, specific provisions within the Italian Inheritance and Gift Tax Act aimed at qualifying the capital distributions to beneficiaries of trusts as a taxable event relevant for IHT purposes. Specific rules are provided, according to which the IHT could apply at the date of transfer of assets to trusts or when such assets are transferred by the trusts to the beneficiaries.

Wealth taxes

In principle, no general “net worth tax” is levied in Italy. However, any individual or entity owning Italian real estate assets is subject to a local property tax (namely, Imposta Municipale Propria (IMU)), regardless of their tax residence. The ordinary rate is 0.86% to be applied to the cadastral value of the real estate asset. Non-Italian situs real estate assets owned by Italian tax resident individuals are subject to an annual wealth tax (namely, Imposta sul Valore degli Immobili Esteri (IVIE)) at 1.06% (in lieu of the former 0.76% rate applicable up to 31 December 2023); the taxable basis (i.e., cadastral value versus fair market value) varies depending on the state in which the property is located.

Italian tax resident individuals are subject annually to a 0.2% wealth tax (namely, Imposta sul Valore delle Attività Finanziarie Estere (IVAFE)) on foreign financial assets (e.g., bonds, shares, other securities, etc.) or to a 0.4% rate as from the 2024 tax period, with reference to financial instruments held in those countries listed under Ministerial Decree 4 May 1999 (blacklisted countries). Foreign current accounts are subject to the wealth tax at the fixed amount of EUR 34.20.

The above also holds true with reference to cryptoassets. Indeed, starting from the 2023 tax period, the Italian legislator has introduced a proportional stamp duty (at the rate of 0.2%, or 0.4% if the cryptoassets are held in blacklisted countries) on the value of cryptoassets held by individuals with Italian intermediaries. Moreover, taxpayers holding cryptoassets on their own (e.g., in physical wallets) or through non-Italian intermediaries will also be subject to the 0.2% stamp duty applied to the value of cryptoassets at the end of the tax period or at the time of disposal, in which case the IVAFE must be apportioned based on the duration of the holding of cryptoassets in a given tax period.

Beneficial tax regimes for new residents

Italian flat tax regime. Since the 2017 tax period, individuals wishing to move their tax residence to Italy may benefit from a favourable regime, provided that they have been considered non-Italian tax residents for at least nine out of the 10 tax periods before their relocation. The Italian flat tax regime is granted for a maximum of 15 tax periods and is revocable, but if revoked cannot be restored.

The regime provides for the application of a yearly substitute tax covering any foreign-sourced income received by new Italian residents (with only one specific exemption), whereas any Italian-sourced income will fall outside the scope of the Italian flat tax regime and will be ordinarily subject to IRPEF at progressive tax rates.

According to a recent law amendment, the yearly substitute tax has been increased to EUR 200,000 for new Italian resident individuals who relocated after 9 August 2024, whereas those who relocated to Italy before such date will continue to pay the yearly substitute tax of EUR 100,000 (according to the regime applicable until such date).

The abovementioned amounts could be increased to an additional EUR 25,000 in case of extension of the Italian flat tax regime to family members. In this respect it is worth pointing out that the yearly substitute tax for family members has not been subject to any increase set out by recent law amendments.

The main features of the Italian flat tax regime are the following:

• no IHT is due on transfers of non-Italian situs assets upon death or gifts;
• there is exemption from wealth taxes and tax monitoring obligations on assets held abroad;
• capital gains upon disposal of qualified participations in foreign companies are out of the scope of the substitute tax if incurred within five years from the first year of the regime’s validity (the anti-avoidance rule);
• the individuals are entitled to benefit from the Double Tax Treaties for income tax purposes entered into by Italy, save that the specific Double Tax Treaty provides otherwise; and
• there is the possibility to file an advance ruling request to obtain confirmation of the applicant’s eligibility for the regime, and confirmation that a specific item of income is covered by the substitute tax, and the possibility to disapply the anti-avoidance rule.

Italian pensioners’ regime. Since the 2019 tax period, non-Italian tax resident individuals holding foreign pensions and moving their tax residence to certain Italian municipalities may opt for the Italian pensioners’ regime, which provides for the application of a flat 7% substitute tax on any foreign-sourced income, provided that the pensioner has not been Italian tax resident for at least five tax periods before their relocation and other conditions are met. Any Italian-sourced income will be ordinarily subject to IRPEF.

The regime provides for the exemption from wealth taxes and Italian tax monitoring obligations on assets held abroad.

Italian inpatriate workers regime. As from 1 January 2024, a new revised regime will be applicable in favour of non-Italian resident workers who have relocated to Italy during the 2024 tax period. This favourable tax regime provides that the Italian personal income tax (IRPEF) will apply — up to a maximum income threshold of EUR 600,000 yearly — to the reduced (i) 50% of any Italian-sourced employment, quasi-employment and self-employment income, or (ii) 40% of such income, provided that the worker relocates to Italy along with his underage child. In order to apply this regime, the following requirements must be fulfilled:

• Commitment to maintaining tax residence in Italy for foreign tax-resident individuals for at least four tax periods (clawback of the tax benefit plus interest for late payment apply in case such commitment is not fulfilled).
• Non-Italian tax residence for at least three tax periods before the relocation to Italy. In the scenario where the working individual relocates to Italy, maintaining a working relationship with the same employer or with an employer belonging to the same group, the new inpatriate tax regime requires that:
  • such individual has been a non-Italian tax resident for at least six tax periods, to the extent that the individual was not previously employed in Italy with the same employer or with an employer belonging to the same group; or
  • such individual has been a non-Italian tax resident for at least seven tax periods, to the extent that the individual was previously employed in Italy with the same employer or with an employer belonging to the same group.
• The working activities are carried out in Italy for the greatest part of the relevant tax period.
• The working individuals meet the criteria of high qualification or specialisation, as defined in Legislative Decree No. 108 of 28 June 2012 and Legislative Decree No. 206 of 9 November 2007.

As a preliminary remark, it is worth mentioning that the tax residence of trusts is determined according to the general principles set out for entities, different from companies, which are subject to corporate income tax. In particular, starting from 1 January 2024, entities will be considered to be resident in Italy when, for the greater part of a taxable year, either: (i) their legal seat; (ii) their place of effective management (i.e., the place where the entity’s strategic decisions are made); or (iii) the principal place of ordinary management (i.e., the place where the day-by-day management is carried out) is located in Italian territory. Italian resident trusts are subject to tax in Italy on their worldwide income, while non-Italian resident trusts are subject to tax in Italy on their Italian-sourced income only.

Italian law also provides a distinction between opaque trusts (i.e., discretionary trusts) and transparent trusts (i.e., trusts whose beneficiaries are identified). Income realised by an opaque trust (i.e., discretionary trusts) is subject to corporate income tax in the hands of the trust itself, while income realised by a transparent trust is directly attributed to the beneficiaries on an accrual basis and taxed in their hands.

As regards taxation of the beneficiaries, any distribution made by a non-resident opaque trust (i.e., trusts whose beneficiaries are “identified” and are entitled to receive the income of the trust) should not be subject to income tax in the hands of the beneficiaries, unless the trust is established in a low-tax jurisdiction. In this latter case, the income distribution is subject to IRPEF up to the 43% rate (plus local surcharges) in the hands of the Italian tax resident beneficiaries, according to a tax provision that has been in force from the 2019 tax period.

More recently, the Italian tax authority released Circular Letter No. 34/E/2022, concerning direct and indirect taxation applicable to trusts and beneficiaries, as well as tax monitoring obligations. In particular, with respect to indirect taxes (IHT and mortgage and cadastral taxes), the guidance acknowledged the position of the Italian Supreme Court provided in several judgments in the last few years, according to which the transfer of assets to a trust does not entail an immediate and actual transfer of the ownership of such assets and then is not subject to indirect taxes at proportional rates. Indeed, the indirect taxes will be due in case of distribution of the assets settled in the trust to the beneficiaries.

As a final remark, the Italian legislator has recently amended the Inheritance and Gift Tax Act (which will be effective as of 1 January 2025) in order to include the capital distributions to the trust beneficiaries among the taxable events that trigger the application of IHT if the relevant transfer falls within the territorial scope of the IHT.

In addition to the above, Article 4 bis of the Inheritance and Gift Tax Act has also been amended to introduce an option for the settlor of the trust (or, in case of testamentary trusts, for the trustee) to allow the payment of the relevant IHT due when the transfer of assets to the trust occurs (instead of paying the IHT at the moment of the capital distributions to the beneficiaries).

In the past four to five years, the indirect taxation of trusts has been addressed in several decisions of the Italian Supreme Court. Indeed, the judges stated that the transfer of an asset to a trust does not produce an immediate and actual transfer of ownership, but shall instead be considered as a mere impoverishment of the settlor, not linked by default to a correspondent enrichment of the beneficiary which is, in turn, the event giving rise to the application of IHT. Such interpretation is now consolidated and has also recently been agreed upon by the Italian tax authorities and finally by the new provisions set out by the Italian legislator with the reform of the Italian Inheritance and Gift Tax Act.

In recent judgments, the Italian local tax courts dealt with the tax regime applicable to financial life insurance policies (e.g., unit-linked policies), outlining the factual and contractual elements relevant to the disapplication of the beneficial tax regime applicable to life insurance policies.

The elements taken into account by the courts are, inter alia, the following:

• no minimum return guarantee nor obligation to return the invested capital;
• no coverage from demographic risk, as there was no premium for the occurrence of death (i.e., in case the company only has the obligation to liquidate the value of the financial instruments included in the policy);
• option to request early redemptions, either total or partial, making the contract term irrelevant;
• the policyholder provides instructions concerning the specific investments underneath the policy; and
• the insurance company does not bear any effective risk concerning the insured event.

In a nutshell, life insurance policies are subject to the following tax treatment:

• a 26% substitute tax on the difference between the amounts transferred to the policy and the amounts received upon redemption;
• the postponement of taxation upon the redemption;
• exemption from income taxes for the amounts payable by the insurance company for the coverage of the insured event; and
• exemption from IHT.

If a financial policy is disregarded, the assets under the policy are considered to be held by the policyholder and the income arising from such assets would be subject to tax on a cash basis according to the relevant tax regime.

Due to the acknowledgment by the Italian tax authorities of the interpretation put forward in recent years by the Italian Supreme Court concerning the indirect tax regime applicable to the settlement of trusts, trusts are expected to be even more commonly used by individuals for tax planning purposes.

Indeed, the new guidance of the Italian tax authority (i.e., Circular Letter No. 34/E/2022) confirms that IHT shall apply at the moment of the capital distributions to the trust beneficiaries and this has also been confirmed, as mentioned above, by introducing an ad hoc provision in the Inheritance and Gift Tax Act, which has been recently amended by the Italian legislator.

Amongst the new developments and trends that are connected with domestic tax legislation, it is important to reiterate the increasing attention that has recently been given to cryptoassets in Italy. Indeed, the Italian legislator has, for first time, introduced an ad hoc tax regime applicable to cryptoassets only as of the 2023 Budget Law.

From a personal income tax perspective, capital gains and other income derived from the repayment, sale, exchange, or holding of cryptoassets, in a given tax period, qualify as miscellaneous income (redditi diversi), subject to a 26% substitute tax. Such substitute tax will be increased to 33% starting from 1 January 2026 according to the newly introduced rule set out by the 2025 Budget Law.

The matter of estate administration is provided for in Italy by the second book of the Italian Civil Code, which was adopted by Royal Decree No. 262 on 16 March 1942. Since then, there have been no particular legislative developments on the matter. In general, Italian law provides for various individuals who have the task of administering the assets of the estate from the moment of the opening of the deceased’s succession until the moment of the acquisition of the assets by the relevant heirs. Specifically, under the will, a testator can appoint a third person in whom they place particular trust as executor of their will; it is understood that the appointment of an executor is not mandatory. The subject appointed as executor shall administer the deceased’s estate to ensure that the provisions of the deceased’s will are executed accurately. Estate administration can involve selling real estate, preparing tax returns, paying debts, and preparing and furnishing accountings to beneficiaries, all of which must be handled appropriately before bequests are given to the beneficiaries. While performing his/her office, the executor may perform acts of extraordinary administration, subject to the authorisation of the judge, after hearing the heirs.

With reference to trust administration, Italian law does not provide for domestic legislation concerning trusts; trusts are recognised and enforced in Italy pursuant to the provisions of the Hague Convention of 1 July 1985 on the law applicable to trusts and their recognition, which was ratified in Italy with Law No. 364 of 16 October 1989. Due to the lack of domestic legislation, trusts can only be established in Italy subject to a foreign governing law that provides for trusts (and in accordance with the Convention provisions). As a consequence, the trust administration is also regulated by the foreign law chosen as the governing law of that trust, together with the relevant Convention provisions.

Italy has no local legal provisions on estate and trust administration; therefore, there have been no regulatory developments in this regard.

There have been no significant developments in the national case law of recent years in regard to estate administration, and many decisions recently adopted by the Italian Supreme Court have merely reaffirmed long-established principles.

In particular, with reference to the role of the executor of an Italian will, the Italian Supreme Court has clarified in several recent judgments that the executor of a will acts in his/her own name but in the exclusive interest of executing the will’s provisions, under the control of the judicial authority (inter alia, Italian Supreme Court, decision No. 24147, dated 26 November 2015); at the same time, the executor is required to manage the estate of the deceased, taking possession of the assets included in the estate, as a fair pater familias, and can perform all necessary acts of management with no time limits (inter alia, Italian Supreme Court, decision No. 12241, dated 14 June 2016). More specifically, while holding “iure proprio”, the rights related to his/her role as custodian and administrator of the estate, the executor of a will is legitimised in legal proceedings only for claims concerning the estate. These types of claims pertain to rights and obligations that belong to the heirs and not to the executor in his/her personal capacity, despite acting in his/her own name. In such instances, the executor acts as a procedural substitute, representing the heirs’ rights, and his/her participation is necessary to complete the judicial process (Italian Supreme Court, decision No. 5520, dated 28 February 2020). At the same time, the prosecution of a suit brought by the deceased to ascertain a possessory situation is not among the actions relating to the office of the executor of the will, but is a dispute aimed at increasing the assets of the estate; in such cases, standing to sue rests exclusively with the heirs of the deceased (Italian Supreme Court, decision No. 21803, dated 2 August 2024).

With reference to trust administration, Italian case law decisions have played a decisive role in the definition of the terms of powers and legal qualification of such activity. In the past few years, there have been several disputes regarding, inter alia, whether the assets conferred in trust should be considered as a separate fund or part of the trustee’s estate. In this regard, recent decisions have expressly recognised that the trustee’s ownership of assets in the context of a trust settlement has only a “temporary nature”, and it has been clarified that the effective transfer of the ownership shall occur when such assets are transferred to the beneficiaries of the trust. More specifically, the Italian Supreme Court, with decision No. 19558, dated 17 June 2022, has ruled that the transfer of assets on trust settlement does not consist of an effective transfer of ownership to the trustee. The trust assets are placed by the settlor under the control of a trustee for the benefit of a beneficiary or a specified purpose. Therefore, such assets constitute a separate fund and are not a part of the trustee’s own estate, so that the trustee’s creditors cannot impair them. The Supreme Court has also recently recognised the validity and effectiveness of the self-declared trust, i.e., a trust in which the trustee and settlor are the same person (inter alia, Italian Supreme Court, order No. 734, dated 7 November 2018).

As mentioned, the executor of a will must comply with the provisions of the will in order to execute the wishes of the testator exactly, carrying out for this purpose only material fulfilments, including the possible establishment of a Foundation, if so provided by the deceased in the will (Court of Perugia, decision No. 336, dated 3 March 2022). It follows that they are entitled to take part in legal proceedings involving the deceased only in order to duly implement the will’s provisions. The Court of Appeal of Genova, with decision No. 440, dated 16 April 2021, has reiterated this principle. The court has stated that, should the deceased be involved in legal proceedings during their lifetime claiming their rights against third parties, the heirs of the deceased are the sole persons entitled to take part in these proceedings after their death, even if the deceased appointed an executor of the will.

By contrast, with reference to trust administration, due to the absence of domestic legislation, local case law decisions have played a decisive role in the definition of such activity. Most recently, inter alia, the Court of Milan, with a decision dated 26 July 2024, has stated that, since the trust does not have a legal personality, it is not recognised as a legal entity but as a legal relationship created when assets have been placed under the control of a trustee for the benefit of a beneficiary or a specified purpose. Therefore, the trustee is the sole individual authorised to engage in relationships with third parties. The trustee, as the rights’ holder, exercises exclusive control over the assets. Consequently, it is the trustee, and not the trust itself, who bears exclusive liability for any legal obligations. In this respect, the Court of Velletri, with a decision dated 24 December 2021, has qualified the trustee, and not the beneficiaries nor other persons, as the party entitled to take part in proceedings regarding the revocation of a trust, since the title to the trust property stands in the name of the trustee and the latter is the sole party of reference in matters involving third parties.

Traditionally, the appointment of an executor of a will was not a widespread practice. Nowadays, in line with a more general intention of people to plan the generational transfer of their estate, this person seems to be more valued. The appointment of an executor may take place, for instance, if the testator has no confidence in the heirs, especially when the latter’s interest is at odds with certain provisions of the will or due to the presence of disputes among those entitled to the estate or the existence of objective difficulties in executing the testator’s wishes. With reference to the trust administrator, the practice of assigning such a role to legal persons, whether or not they belong to banking groups operating on a professional basis, is becoming increasingly widespread in Italy, in order to ensure continuity over time and competence in performing the task.

Given the growing climate of uncertainty caused by the pandemic, the use of asset protection instruments has continued. In particular, because of the pandemic, people felt the need to manage their wealth in order to avoid being unprepared for exceptional scenarios. The careful choice of an administrator to ensure full implementation of the testator’s will or the proper execution of the trust programme defined by the settlor provides a greater sense of protection.

Certain reforms have occurred in family law matters which have had a significant impact on matters of estate. These include the regulation of filiation (as per the Law of 10 December 2012, No. 219, which sought to achieve complete equality of treatment of all children with regard to the filiation relationship) and the amendment introduced under the Law of 20 May 2016, No. 76 (the so-called Cirinnà Law that has introduced the possibility in Italy for two persons of the same sex to enter into an arrangement similar to marriage, known as a “civil union”, recognising them — in case of death of one of the partners — to have the same inheritance rights as those provided for married couples by the Italian Civil Code). Moreover, the recent entry into force of European Regulation. No. 650/2012 can be considered a turning point in terms of the law applicable to the succession of citizens of European Union states.

With reference to trusts, as anticipated, Italian law does not provide for comprehensive domestic legislation; however, the Italian legislator has enacted some law provisions concerning trusts over the years. In particular, under Law No. 112 of 22 June 2016, better known as “Dopo di Noi” and containing provisions on assistance for persons with severe disabilities without family support, the Italian legislator has recognised the use of trusts as one of the instruments that can be used as measures of assistance, care and protection for disabled persons.

Italy has no local legal provisions on estate and trusts.

Traditionally, family disputes among heirs in Italy mainly arise from the violation of the reserved shares committed by means of testamentary dispositions or donations made by the deceased during their lifetime. Such traditional disputes have combined with the complexity of the current family structures, including civil unions, de facto cohabitation and more marriages per person. New disputes have also arisen with regard to the widespread use of additional estate planning tools and in connection with the transnational natures of many situations. In such a scenario, even the admission of the adoption in the context of a civil union — which, although not expressly provided for in the law, has been recognised by the courts — has made the climate even more uncertain and potentially subject to further disputes (Supreme Court decision No. 12962 of 22 June 2016 and Constitutional Court decision No. 79 of 23 February 2022).

With reference to trusts, thanks to national case law developments, doubts about the validity of the trust instrument are overcome. Therefore, if compliant with the Convention and the relevant foreign governing law, trusts are now recognised as enforceable in Italy subject only to the Italian public order principles. Even trusts “interni” (i.e., trusts established by Italian individuals with regard to assets located in Italy and where the sole foreign element is the governing law) are now fully recognised as valid by Italian case law (inter alia, Italian Supreme Court, decision No. 10105, dated 9 May 2014; Italian Supreme Court, decision No. 15804, dated 16 April 2015). In addition, since trusts interni are regulated by foreign governing law, should a dispute pertaining to a trust be conferred to the jurisdiction of an Italian court, the latter shall be required to apply the relevant trust’s foreign governing law. In this regard, in a recent decision adopted by the Court of Ancona (decision No. 414, dated 29 January 2014), the judges, applying the provisions of Article 51 of the Law of Jersey, have come to issue a measure (not known in the Italian legal system) similar to the one that could have been issued by the Court of Jersey. Finally, as of today, the Italian Supreme Court (decision No. 9637, dated 19 April 2018) has definitely overcome the theory according to which a trust was an “atypical contract” and therefore subject from time to time to judicial review as to its merits; such assessment is to be considered to have already been made with Italy’s ratification of the Convention, which recognised the circumstance that the trust instrument is intended to realise interests worthy of protection under the Italian legal system.

Most recently, the Italian Supreme Court (ordinance no. 5073/2023) has stated that, in the case of an inter vivos trust with discretionary post-mortem effects, the protection of the beneficiaries’ inheritance rights with reference to the trust deed and the subsequent deed of transfer is not ensured by the non-recognition of the trust, but by the action for reduction whose defendants shall be identified with the beneficiaries if the trustee has already executed the settlor’s plan (or where the beneficiaries themselves can be identified with certainty), or with the trustee if the trust’s objectives have not yet been fulfilled (as well as in the case of a so-called purpose trust, where there is no specific identification of the beneficiaries).

The first two judgments issued by Italian courts concerning “digital inheritance” should be highlighted. In particular, the Court of Bologna on 25 November 2021 (following a single ruling in such matter by the Court of Milan in the same year), has ruled on the transfer mortis causa of digital data belonging to a deceased person in favour of their heirs. The decision addresses, for the first time in Italy, the issue of access to the personal data of a deceased person, as well as the ways in which the rights of the deceased can be exercised by their heirs. In the court’s opinion, a specific will expressed by the deceased may exclude the possibility of their heirs having access to their digital data. With reference to trusts, local case law has mainly reaffirmed the same principles provided for by national case law. In particular, local courts have also affirmed the validity of trusts interni compliant with the Convention and the relevant foreign governing law. In the decision of the Court of Bologna, dated 1 October 2003, it was clarified that the only limit to the validity of trusts interni is that they must be able to pursue legitimate interests, which is to say interests not prohibited by Italian mandatory rules. Moreover, local courts are increasingly faced with trusts set up for a wide variety of purposes. In particular, trusts are increasingly used in the context of divorce proceedings and consensual separation agreements as a means of resolving disputes that have arisen about the headship and use of common property, with the aim also of ensuring the maintenance of children until they achieve economic independence. In this respect, the Court of Syracuse, in a decree dated 17 April 2013, established a precedent by incorporating a trust in a separation agreement, appointing the ex-wife as trustee to manage the spouses’ jointly owned estate for the benefit of their children until they reached economic independence. In connection with the adoption of Law No. 112 of 22 June 2016 (better known as Dopo di Noi), trusts are often used as a means by which to assist persons with severe disabilities. A first relevant example of the use of a trust instrument in this sense can be found, among others, in the decree issued by the Court of Florence on 8 April 2004, by which the court has authorised the parents of a minor affected by disabilities to set up a trust with the assets of the child himself.

With a view to ensuring freer transfer of inheritance assets, there are now persistent voices calling for a renewal of the principles concerning the rights of forced heirs in such a way as to free the assets of donative inheritance from the constraints of possible legal action and to overcome the prohibition of agreements on renouncement of inheritance. In such a scenario, the 2024 Italian Budget Law draft contained a proposal to amend certain provisions of the Italian Civil Code to provide that the donor’s legitimates (who have successfully brought an action for reduction) would have no longer been able to seek the restitution of the donated property from third-party purchasers; the proposal has already been removed from the relevant budget law. With reference to trusts, the use of such an instrument is now widespread and continuous. Trusts are now used in Italy for specific new purposes and are frequently established not only for the purpose of passing wealth and control from generation to generation but also for the benefit of individuals with disabilities or for charitable initiatives (both by public entities and individuals).

Given the growing climate of uncertainty caused by the pandemic, the use of asset protection instruments has continued. A sign of such increased awareness has come from the increase in the number of wills and donations, the latter often involving only bare ownership of real estate and company shares, thus allowing the donor to retain full disposal of them. From the same perspective, the trust instrument is now considered one of the best arrangements to ensure legitimate preservation and transfer of wealth, and also a flexible tool that can satisfy the economic needs of the settlor and their family according to actual circumstances.