From the perspective of indirect taxation, the Revenue Agency relies on Article 4-bis(1) of the Italian Inheritance and Gift Tax Code (Testo Unico sulle Successioni e Donazioni – TUSD), introduced by Article 1(1)(e) of Legislative Decree No. 139 of 18 September 2024. Under this provision, “trusts and other arrangements involving assets subject to a segregation regime are relevant for inheritance and gift tax purposes only where they result in a gratuitous enrichment of the beneficiaries. The tax applies at the time of the transfer of assets and rights to the beneficiaries.” Pursuant to paragraph 4 of the same provision, the new rules also apply to trusts established before the legislation entered into force. In accordance with Article 9(3) of Legislative Decree No. 139/2024, the regime applies to deeds executed from 1 January 2025 onwards, making the provision applicable ratione temporis to the trust termination at issue notwithstanding the earlier establishment of the trust.
On this basis, and referring both to Circular No. 34/E of 20 October 2022—which states that the establishment of a trust “does not in itself constitute a taxable event for inheritance and gift tax purposes, as taxation requires an effective transfer of wealth through a genuine and non-merely instrumental attribution of assets”—and to the Italian Supreme Court’s Order No. 31857 of 15 November 2023, according to which “the early termination of a trust removes the taxable event, while the automatic retransfer of assets that are no longer segregated remains fiscally irrelevant”, the Revenue Agency concludes that the deed of termination is not subject to inheritance and gift tax because it lacks the objective taxable event required by law.
Two aspects of the ruling have practical significance extending beyond the specific facts of the case.
First, the Agency confirms the principle of continuity of the retransferred asset. It expressly recognises that the bare ownership of the shares in the company resulting from the merger derives from the bare ownership of the shares originally transferred into the trust. Consequently, corporate reorganisations carried out during the life of the trust do not interrupt the continuity between the original contribution and the subsequent retransfer.
Secondly, the Agency addresses the increase in value of the retransferred asset. The settlor argued that the value of the bare ownership had increased over time as a consequence of her advancing age, applying the 45% coefficient attributable to the bare owner under the parameters set out in the Ministerial Decree of 24 December 2025. Nevertheless, the Agency held that no taxable enrichment had arisen, since the increase in value did not constitute a transfer of wealth in favour of a beneficiary.
As regards direct taxation, the Revenue Agency also refers to Article 9(5) of the Italian Income Tax Code (TUIR), under which, unless otherwise provided, the rules applicable to transfers for consideration also apply to transactions involving the creation or transfer of limited real rights and to contributions to companies. The Agency reiterates, however, that the recognition of a taxable capital gain under Article 67(1)(c) and (c-bis) of the TUIR requires a transaction for consideration. Since the trust termination involves no consideration either upon the original transfer or upon the retransfer, the Agency concludes that the termination of the trust does not constitute a taxable event for Italian income tax purposes.
Certain practical issues nevertheless remain unresolved. The ruling does not address registration tax or mortgage and cadastral taxes, consistently with the fact that the trust fund consisted exclusively of shareholdings. Accordingly, in relation to trusts holding Italian real estate, the approach previously adopted in Reply No. 165/2024—under which the termination deed was subject only to fixed registration tax—remains relevant.
More importantly, the ruling does not clarify the tax basis of the retransferred shares. In the case at hand, the applicant prudently assumed a nil tax basis because the shares had originally been acquired by inheritance in 1989. The tax neutrality of the trust termination does not imply any step-up in the tax basis of the assets, meaning that any latent capital gain remains entirely attributable to the settlor upon a future disposal of the shares.
Finally, it should be borne in mind that the ruling is based exclusively on the factual circumstances presented by the applicant. Its conclusions cannot therefore be automatically extended to different situations, each of which requires a case-by-case assessment by experienced private wealth and tax professionals.
Our Wealth Planning team remains available to discuss the implications of this ruling and to provide tailored advice on trust structures and cross-border succession planning.
