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Who Inherits the House

The law that governs the succession of a foreign owner of an Italian house is not always Italian law. For deaths on or after 17 August 2015, an EU Regulation designates one law for the whole estate, wherever the assets are, and leaves land registration and taxation to national rules.[1][2][3] Which law that is depends on the deceased’s residence or on a choice made in advance, and that law decides who the beneficiaries are and what share each one receives.[4]

By The Tuscan Editorial

Picture a stone house in the hills, summer lunches under the pergola, a family from several countries round one long table. Sooner or later a question arises that has nothing to do with lunch: which country’s law will decide who inherits the house when the owner dies.

Whose law decides who inherits?

Regulation (EU) No 650/2012 applies to the succession of persons who die on or after 17 August 2015, and it determines the applicable law for the succession as a whole.[1] That covers who the beneficiaries are and their shares, the rights of the spouse, the transfer of the estate to the heirs, acceptance or waiver, the disposable portion and the reserved shares, the restoration of gifts, and the sharing out of the estate.[4] The Regulation applies whether or not the designated law is that of a Member State.[1]

The general rule is that the law of the State in which the deceased had his or her habitual residence at the time of death governs the whole succession.[5] An exception applies where the deceased was manifestly more closely connected with another State.[6] Habitual residence is assessed on the overall circumstances of the person’s life in the years before death.[7] It is a question of fact for each case, and it is not the same as nationality, domicile or tax residence.

Two consequences follow. If the deceased was habitually resident in Italy, Italian succession law applies to the whole estate, including the reserved shares. If the deceased lived in another State, the law of that State generally governs the succession, including the Italian house. The entry of the heirs in the Italian registers, however, follows Italian rules, because the nature of rights in rem and the recording of rights in immovable property are excluded from the Regulation.[2] Denmark and Ireland do not take part in the Regulation, and it does not bind the United Kingdom, so the position of people connected with those States needs separate advice. Succession depends on the family, on the nationality and on the residence of the deceased.

What are reserved shares, and when do they apply?

Italian law reserves part of the estate to certain close relatives, the legittimari, or forced heirs. They are the spouse, the children (including adopted children) and, in the absence of children, the ascendants.[8] An heir whose reserved share has been infringed can bring an action for reduction.[9] The size of the shares depends on the family situation and is not set out here.

These rules belong to the Italian law of succession. They apply to a given estate if Italian law governs the succession, either because the deceased was habitually resident in Italy or because Italian law was chosen. If another law governs, that law decides whether and how a portion of the estate is reserved. The Regulation lists the disposable portion, the reserved shares and the restoration of gifts among the matters within the applicable law.[10]

Whether a particular arrangement, such as leaving the house to one child, is effective is a question for a lawyer familiar with the applicable law.

Can the law be chosen in advance?

Yes. A person may choose the law of a State whose nationality he or she holds at the time of making the choice or at the time of death.[11] A person with several nationalities may choose the law of any of them.[11]

The choice must be made expressly, in a declaration in the form of a disposition of property upon death, or be shown by the terms of such a disposition.[12] The validity of the choice is governed by the chosen law,[13] and a change or revocation must satisfy the formal requirements for a change or revocation of a disposition of property upon death.[14]

The chosen law covers the succession as a whole, not the Italian house only.[4] A choice of law does not affect taxes, which are outside the Regulation.[3] Italian inheritance tax is therefore a separate matter from the choice of the succession law. Whether a given person’s habitual residence, or a given choice, produces a particular result is a question for a lawyer in each of the countries concerned.

How is an inheritance taxed in Italy?

According to the Agenzia delle Entrate (AdE), the Italian revenue agency, the inheritance tax rates in Italy are as follows, by category of beneficiary.[15]

BeneficiaryRateThreshold
Spouse and relatives in the direct line4%On the net value of the share exceeding €1,000,000 for each beneficiary
Siblings6%On the value exceeding €100,000 for each beneficiary
Other relatives up to the fourth degree, and in-laws in the collateral line up to the third degree6%None
All other beneficiaries8%None

A threshold of €1,500,000 applies to beneficiaries with a severe disability.[16] Whether Italian immovable property is within scope of the Italian tax regardless of the deceased’s residence is a matter of the general rules on territoriality, which the Agenzia describes on a separate page. Other taxes may be due on registration of the transfer and on cadastral and mortgage formalities.

Does the flat tax change any of this?

The regime for new residents, the “flat tax”, is a separate scheme. According to the Agenzia delle Entrate, for transfers of residence to Italy from 1 January 2026 the substitute tax on foreign income is €300,000 a year, with €50,000 for each family member who extends the option.[17]

The Agenzia’s guidance on the regime states that its effect on inheritance and gift tax concerns assets held abroad, and that it gives no relief for assets in Italy.[18] The conditions, and the interaction with the succession tax of another country, are matters for a tax adviser.

Why does the topic arise at the time of purchase?

Succession consequences depend on the way a property is held. Different ways of holding a property (in a sole name, jointly, through a company, with a usufruct) have different succession and tax consequences, and a lawyer in each of the countries concerned can explain them. Changing the way a property is held after the deed can itself be taxed.

Properties come to the market after an inheritance frequently because the heirs, sometimes numerous and in different countries, do not wish or are unable to keep them. Where the owner did not address the question, heirs must be identified and all of them must take part in the sale, and the acceptance of the inheritance must be recorded in the registers before the property can be transferred. See “Due Diligence: What Sinks a Purchase”.

Frequently Asked Questions

Does a foreign will cover an Italian property?
It depends on the law that governs the succession. Under Reg. 650/2012 that is in principle the law of the last habitual residence, or the law of a nationality chosen in a disposition, and it applies to the estate as a whole.[5][11] Registration of the heirs in Italy follows Italian rules,[2] and the form and validity of a will are matters for a lawyer.
What is forced heirship in Italy?
Italian law reserves part of the estate to the legittimari: the spouse, the children and, in some circumstances, the ascendants (art. 536 c.c.).[8] A protected heir can bring an action for reduction (arts 553 ff.).[9] It applies where Italian law governs the succession.
Can a person choose the law of their own country to govern the succession?
Yes, under art. 22 of Reg. 650/2012, a person can choose the law of a nationality held at the time of the choice or at death.[11] The choice must be express, in a disposition upon death, and covers the whole succession.[12] It does not affect tax.[3]
What are the Italian inheritance tax rates?
According to the Agenzia delle Entrate: 4% for spouse and direct line above €1,000,000 per beneficiary, 6% for siblings above €100,000, 6% for other relatives to the fourth degree without a threshold, and 8% for others without a threshold.[15]
Does the choice of succession law change Italian inheritance tax?
No. Tax is outside the scope of Reg. 650/2012 (art. 1(1)).[3]
Why does succession matter when buying?
Because the way a property is held influences its succession and tax treatment, and different countries treat it differently. A lawyer in each country can advise.

Notes to the article

  1. Regulation (EU) No 650/2012, art. 83(1) (deaths on or after 17 August 2015); art. 23(1) (the applicable law governs the succession as a whole); art. 20 (universal application). ↩︎
  2. Exclusion of the nature of rights in rem and of the recording of rights in immovable property: art. 1(2)(k)–(l). ↩︎
  3. Taxes are outside the Regulation: art. 1(1). ↩︎
  4. Regulation (EU) No 650/2012, art. 23(1) (the applicable law governs the succession as a whole) and art. 23(2) (matters covered by the applicable law). ↩︎
  5. General rule of habitual residence: art. 21(1). ↩︎
  6. Manifestly closer connection: art. 21(2). ↩︎
  7. Assessment of habitual residence: recital 23. ↩︎
  8. Civil Code art. 536 (the legittimari). ↩︎
  9. Action for reduction: arts 553 ff. ↩︎
  10. Regulation art. 23(2)(h) and (i) lists the disposable portion, the reserved shares and the restoration of gifts as matters within the applicable law. ↩︎
  11. Regulation art. 22(1) (nationality at the time of the choice or at death). ↩︎
  12. Art. 22(2) (express choice, in a disposition upon death). ↩︎
  13. Art. 22(3) (validity governed by the chosen law). ↩︎
  14. Art. 22(4) (change or revocation). ↩︎
  15. AdE, “Imposta di successione: aliquote e franchigie”. ↩︎
  16. The threshold of €1,500,000 applies to beneficiaries with a severe disability under art. 3(3) of Law 104/1992. ↩︎
  17. AdE, “Opzione per i neo-residenti”. ↩︎
  18. The AdE guidance on the regime and on inheritance and gift tax. ↩︎

About the Journal

The Tuscan Editorial

The editorial team of the office

The Tuscan Editorial is the editorial team of The Tuscan, a private property office in Tuscany. Every article is built on official texts and published guidance, and checked against the rules in force on the date shown at its head.

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