Q I am an American living in Italy and I own a property there. Could you advise me on what inheritance tax laws would be applied - Italian or American. Would it be prudent to draw up an Italian will?
AUS Italian inheritance tax is calculated on the net value of the deceased Estate (i.e. the value of the estate net of debts and liabilities), and it is payable on all assets located in Italy. When the succession relates to immovable property, the inheritance tax is generally calculated on the cadastral value (obtained by multiplying the property’s cadastral income by a set coefficient that varies according to the category the property belongs to (i.e. residential house, office, garage, shop, etc.). The cadastral value of an immovable property is normally considerably lower than its current market value.
There is a tax treaty between the United States and Italy. The main purpose of the treaty is to reduce any double taxation on Italians living in the US, and US citizens living within Italy. When a succession involves international aspects relating to both the US and Italy, it is advisable to seek professional tax advice to make sure that inheritance tax liabilities are paid correctly in both countries. It is also generally advisable to make a separate Italian Will to cover your Italian assets as doing so can dramatically simplify the probate procedure in Italy upon your death. The Italian authorities may have difficulty in examining your American Will, especially as it relates to your Italian assets. To facilitate matters, if you leave your heirs with an Italian Will, it will be deposited with an Italian notary who will be familiar with the document and will deal with all related formalities. Laura Protti,LEP Law