Siblings Inheritance Tax Assessment for Australian Residents

It is increasingly common, for a person resident in Australia, to inherit assets located in Italy from either a brother or sister who died in Italy.

Let's see what tax requirements an Australian-resident must comply with according to the Italian Law to acquire the ownership of the inherited assets.

According to Italian law, the first step is to file the succession declaration; this is a tax document disclosing to the Government the value of the inherited assets. By lodging the succession declaration the beneficiary shall also pay the tax described below.

Inheritance Tax

The inheritance tax is assessed on the value of inherited assets.

The amount to be paid is based on the relationship between the heir and the deceased. The more distant the relationship, the higher the rate.

In general, rates range from 4% to 8%; however, there is a portion of the inherited asset's value that is free of charge. This untaxed portion is called the tax-free allowance.

Where the heir is a brother or sister of the deceased, the tax is assessed at 6% rate.

However, there is a €100,000 exemption, whereby the tax would be due only on the part of the inheritance assessed at value higher than €100,000. In practice, no tax is due up below €100,000 assets value (tax-free allowance).

This tax must be paid within 90 days of the deadline for filing the declaration, i.e., within one year by the opening of the succession.

The payment can be made together with the inheritance declaration by direct debit to the bank account of the person lodging the succession declaration; or within 90 days of the deadline for filing the inheritance declaration, using the tax Form F24.

Further taxes on inherited real estate

When the inherited property includes real estate, in addition to the inheritance tax the heir must also pay the following additional taxes:

• Mortgage tax: 2% assessed on the taxable value of the property;

• Land registry tax: 1% assessed on the taxable value of the property;

• Stamp duty: €85;

• Mortgage and land registry services fee: €120 (€65 for registration and €55 for land registry transfers);

• Special taxes: €16 for a certified copy of the declaration.

These taxes are automatically calculated with the inheritance declaration and debited to the bank account of the person lodging the tax document in question.

Conclusion

Siblings inheritance tax for Australian residents 

To become the registered owner of the assets inherited in Italy, the heir residing in Australia (sibling of the deceased) must:

- file the succession declaration.

- pay the inheritance tax, equal to 6% on the portion of the inheritance exceeding €100,000;

- pay any additional taxes on the inherited property.

Those beneficiaties unable to handle the tax procedures in Italy can delegate a professional to do everything for him or her to ensure that the inheritance will be settled correctly, avoiding the risk of errors and this penalties.