Publication in the JFA Journal: The Optional Early Payment Regime for Italian Inheritance and Gift Tax on Trust Transfers

The October issue of Ingénierie Patrimoniale (Journal of Wealth Engineering - JFA) features an in-depth article by Sandro Assogna, lawyer and founder of TaxLhab, on Italy's new optional early payment regime for inheritance and gift tax (ISD), effective from 2025 on asset transfers from trusts. This provision, introduced by the legislative decree of August 7, 2024, allows trust grantors to crystallize the ISD at an earlier date than the actual transfer of assets to beneficiaries, by fixing the tax amount at the time of the initial contribution to the trust or upon opening the estate.

Overview of the Optional ISD Regime for Trust Transfers

The article details this optional measure, enabling the grantor or, in the case of testamentary trusts, the trustee, to opt for early payment of the ISD. The tax is then calculated based on the value of the assets at the time of their entry into the trust, thus avoiding potential future tax rate increases. However, this optional regime raises questions about its compatibility with the principle of contributory capacity stipulated by Article 53 of the Italian Constitution, and about its application in cross-border contexts, particularly for French residents.

Cross-Border Issues and Tax Conventions

The article further explores the implications of this regime within the framework of the Franco-Italian convention to avoid double taxation on inheritances and gifts, which may not apply when the ISD is paid by the trustee or the grantor. This thorough analysis sheds light on the challenges of achieving complex harmonization in an international context, especially given the increasing mobility of wealth.

For more information, consult the full article in the latest issue of the Journal of Wealth Engineering : https://www.editions-jfa.com/ingenierie-patrimoniale/

For any inquiries regarding international tax considerations on cross-border wealth transfers between France and Italy, please feel free to contact Sandro Assogna (sandro.assogna@avocat.fr).