British citizens and Italian Inheritance: English law has adopted the principle of scission, which means that the succession of movable assets is governed by the law of the deceased’s domicile (the country where the deceased lived), while the succession of immovable assets is governed by the law of the situs (where the property is located). For example, if a British citizen without a will has a property in his name in Italy at their time of death, under English law the inheritance should be regulated by the Italian law of succession. The Italian legal system accepts this “referral” by the English law and therefore this asset is ruled by the Italian law of succession.
Under Italian succession law certain members of the family are automatically entitled to a share of the deceased’s assets at the time of death. They are known as “forced heirs” (in Italian they are called “legittimari”). They are:
1. The spouse of the deceased: (including separated, but not including divorced);
2. The children: (legitimate, legitimated, illegitimate or adopted);
3. The ascendants: when no children or spouses are alive at the time of the deceased’s death.
In case of absence of forced heirs, the following close relatives are entitled to inherit:
1. Parents, siblings (brothers and sisters) and their descendants;
2. Uncles, aunts and other collateral (nieces, nephews and so on);
3. The Italian State (Stato Italiano)
If you have assets in Italy, it is always recommended to make an Italian Will, in order to prevent any contested probate which usually ends up in a long lasting civil trial. Furthermore, in presence of an Italian will, taxation can be less inflictive. Finally, making a will renders possible to choose the Italian or the foreign Law by which is a codicil through which a person can decide to which legislation the estate is to be ruled after the death. In case a will does not exist for the deceased, or if an existing will has been declared invalid, the Italian general rules on intestate succession apply.
Therefore the closest relatives of the deceased are entitled to a share of the assets in accordance with the provisions set forth by Italian Law.
Italian inheritance tax was abolished in 2001 then consequently re-introduced by the government. Heirs are required to pay Inheritance Tax when they submit the declaration to the local Agenzia delle Entrate.
Italian Inheritance Tax is levied at three different flat rates, on the whole or part of the Estate of the deceased with reference to the entitled beneficiaries, as follows:
• 4% where the Estate or part of the Estate devolves to the deceased’s spouse or children, with a nil rate band up to €1,000,000 each (the so called “Franchigia”)
• 6% where the Estate or part of the Estate devolves to brothers or sisters (subject to an exempt amount of €100,000 each) and to other relatives of the deceased up to the fourth degree (without any “exempt amount”)
• 8% where the Estate or part of the Estate devolves to unrelated parties. Where the Estate or part of the Estate devolves to one or more disabled children, the exempt amount is increased to €1,500,000
• Where the Estate includes a business or a substantial shareholding in a company, whatever the amount, these are not taxed if they pass to the children of the deceased and if the children undertake to continue the business or control the company for at least five years