Buying a villa on the Costa Smeralda or a palazzo in Cagliari also means engaging in long-term wealth planning. Italian succession tax is among the gentlest in Europe, but it intersects with other regimes : French, Swiss, British, that can significantly modify the equation. Here is what you need to know before acquiring, and above all before transmitting.
In summary
Italy applies one of the gentlest succession tax regimes in Europe: a deduction of €1M per beneficiary in direct line, and a rate of only 4% beyond.
The Franco-Italian convention prevents double taxation: a Sardinian real estate property remains taxed in Italy, with a tax credit mechanism on the French side.
For flat tax beneficiaries, foreign-located property is completely exempt from Italian succession and gift taxes for the entire regime duration (up to 15 years).
Italy, Land of Gentle Succession
The figures speak for themselves. Where France applies rates reaching 60% in direct line beyond deductions, Italy remains one of Europe’s least demanding countries for wealth transmission.
Three tiers structure Italian succession tax, depending on the degree of kinship:
| Degree of Kinship | Deduction | Rate Beyond |
|---|---|---|
| Spouse and direct descendants | €1,000,000 per beneficiary | 4% |
| Brothers and sisters | €100,000 per beneficiary | 6% |
| Other relatives up to 4th degree | None | 6% |
| Third parties (no kinship) | None | 8% |
Concretely: a parent transmitting to their two children a Sardinian villa valued at 3 million euros in equal shares benefits from two deductions of one million each. Taxation therefore applies only to 1 million, at 4% or 40,000 euros total. For the same property transmitted under the same conditions in France, the bill would be considerably higher.
Which Law Applies? The European Regulation Decides
Since August 17, 2015, the European succession regulation (No. 650/2012) establishes a simple principle: the law applicable to the entire succession is that of the deceased’s habitual residence at the time of death.
This point is crucial. A Frenchman who settles durably in Sardinia and dies there will be subject, by default, to Italian succession law which presents notable differences with French law, particularly regarding forced heirship and the surviving spouse’s position.
The regulation however allows the deceased to designate by testament the law of their nationality. A Frenchman residing in Sardinia can thus choose, during their lifetime, that their succession be governed by French law. This choice must be formalized in an authentic or holographic testament and registered.
An Essential Distinction: Civil Law and Tax Law
The European regulation concerns only civil law who inherits, in what proportions, with what latitude. Tax law, however, obeys different rules: bilateral conventions and national legislation. You can thus end up with a succession governed by French law but taxed partly in Italy.
The Franco-Italian Tax Convention: A Rare Asset
Italy is one of the few countries to have signed with France a bilateral convention specifically dedicated to succession rights. This convention, signed in 1990, frames the distribution of taxation between the two states and prevents double taxation.
The principle for real estate is unambiguous: real estate located in Italy is taxed in Italy, and property located in France is taxed in France. If the deceased resided in France, France may take the Italian property into account in calculating its own rights, while imputing the tax already paid in Italy.
One important caveat however: this convention could be denounced. The precedent of Switzerland, whose similar agreement was denounced in late 2014, invites us not to consider this mechanism as guaranteed in perpetuity. For those considering acquiring Sardinian property with transmission in mind, seniority remains an asset. Better to act within the current framework than to speculate on the next.
Italian Civil Law Rules to Know
If Italian law applies to the succession, certain particularities merit anticipation:
The Reserved Share
Like French law, Italian law protects forced heirs: spouse, descendants, and failing that, ascendants. The disposable portion is more restricted than in France for the spouse, who is placed at the top of the forced heirs hierarchy including ahead of children in certain configurations.
Succession Acceptance
Notable particularity: in Italy, heirs must formally accept the succession before a notary. This acceptance can be unconditional, in which case the heir is liable for any debts on their personal wealth or with benefit of inventory, which limits liability to the extent of transmitted assets.
Succession Tax Payment Deadline
Heirs have one year from the date of death to pay succession rights to the Italian tax authority. A relatively comfortable deadline, but one that requires quick coordination between French and Italian notaries when succession is cross-border.
The Particular Case of Flat Tax
For beneficiaries of the new residents regime, the €300,000 annual flat tax, succession tax is even more favorable. Throughout the regime’s duration (up to 15 years), foreign-located property is completely exempt from Italian succession and gift taxes.
Only property located in Italy remains subject to ordinary tax law, that is, the deductions and rates described above. For international wealth, the effect is considerable: a London securities account, a Paris civil partnership, a Panamanian yacht pass in total exemption.
To Anticipate is to Protect
Three recommendations structure successful transmission in Sardinia:
Draft a testament consistent with overall wealth strategy, and file it in the Italian testament register. A testament not found equals a non-existent testament.
Identify in advance applicable tax law Italian, French, or mixed and quantify expected rights in each scenario. An anticipated gift, made before residence transfer or during flat tax, can considerably lighten the final bill.
Work with a bilingual notary or with two coordinated notaries. Cross-border succession rests on instruments that must be recognized in both countries, translated by sworn translator when necessary.
OGGI Support
The succession dimension of real estate purchase in Sardinia is rarely addressed frontally by property agents. Yet it is decisive: property acquired at 50 is not conceived to be transmitted under the same conditions as property acquired at 70.
At OGGI, Murielle and Gérard structure their support by integrating this dimension from the acquisition phase. Choice of holding method (personal name, co-ownership, naked ownership with usufruct, company), articulation with tax residence, introduction to Sardinian and French notaries experienced in cross-border files: they orchestrate what, done in order, transforms an acquisition project into a transmission project.
In Summary
Sardinia offers, on the succession front, a tax framework notably gentler than most European jurisdictions. The Franco-Italian convention, the €1 million deduction per beneficiary and rates of 4 to 8% make it a particularly suitable destination for long-term wealth planning.
Provided you anticipate. Cross-border succession is not terrain for improvisation. The earlier it is integrated into acquisition thinking, the more it protects what you wish to transmit.
Frequently Asked Questions About Succession in Sardinia
My children live in France. Will they pay taxes in both France and Italy?
For real estate located in Sardinia, rights are due in Italy, where the €1M deduction per child applies. The Franco-Italian convention prevents double taxation: if you were a French resident at death, France may account for the Italian property but will impute the tax already paid in Italy. In practice, the final bill is very contained in the majority of configurations.
Must I draft a testament in Italian?
Not necessarily. A testament drafted in France, in French, before a notary or holographic, is perfectly valid in Italy subject to respecting formal requirements. It will simply need to be translated by a sworn translator when the succession opens. To avoid any conflict, we recommend however explicitly designating the applicable law (Italian or your national law) in the testament.
How does the €1 million deduction work?
The deduction applies per beneficiary and per degree of kinship. Concretely, for transmission to two children, total deduction reaches €2 million. Beyond that, the 4% rate applies. A parent holding Sardinian wealth of €2.5M and transmitting it equally to their two children will pay approximately €20,000 in Italian succession rights to compare with €200,000 to €400,000 that the same transmission would have cost in France.
What if I hold the property through a French civil partnership?
The holding method significantly modifies succession tax. A French civil partnership holding Italian property is treated as real estate in Italy under the bilateral convention, which does not bring the sometimes-sought advantage. Other structures may be more suitable depending on your wealth situation hence the importance of arbitrating this point at acquisition, not at succession.
Is gift tax treated like succession in Italy?
Yes, lifetime gifts follow the same rules: €1M deduction for spouse and children, 4% rate. An anticipated gift can be a powerful wealth tool, particularly if made during flat tax duration, in which case it may benefit from total exemption on foreign property.
This article is informational in nature. It constitutes neither legal advice nor tax advice. For any decision relating to cross-border succession, we recommend consulting a notary and tax lawyer specialized in this field.
