Private Wealth 2024 Comparisons

Tax System

Italian taxation applies to both resident and non-resident persons. Italian resident persons are subject to tax according to the worldwide taxation principle. Non-residents are taxed on Italian-source income.

Tax Residence of Individuals

For the purposes of Italian personal income tax, Art. 2, para. 2, of Presidential Decree No. 917/1986 (Italian Consolidated Income Tax Act, TUIR) sets out that residents of Italy are those individuals who, whether nationals or not, for the greater part of the calendar year (ie, 183 days or more, or 184 in leap years), including fractions of days:

• have their residence in Italy according to the Italian Civil Code. The Italian Civil Code defines residence as the place where “the person has his/her habitual abode”. The individual’s residence is identified as where he/she is physically present with the intention of residing there with a degree of habituality and stability;
• have their domicile in Italy. For tax purposes, domicile is defined as the place where an individual’s personal and family relationships are primarily developed;
• are physically present in Italy; or
• are registered with the Italian Register of the resident population (“Anagrafe”). Enrolment with the Anagrafe is regarded as a rebuttable presumption.

Categories of Taxable Income

Personal income tax is applied in aggregate on the following categories of income:

• income from lands;
• income from capital;
• employment income;
• self-employment income;
• business income; and
• other income (including capital gains).

Income Brackets and Tax Rates

Personal income tax applies to incomes determined on a worldwide basis at proportional and progressive rates up to 43% as outlined below:

• 23% up to EUR28,000;
• 35% from EUR28,001 to EUR50,000; and
• 43% from EUR50,001.

Local (regional and municipal) surcharges generally apply up to roughly 2%.

Substitutive Taxation

Financial income and alike – such as dividends and interests – is generally subject to a final withholding tax/substitutive tax of 26%.

Capital gains from the disposal of both qualified and non-qualified shareholdings are subject to a 26% substitutive tax. Qualified shareholdings are defined as those representing more than 20% of the voting rights exercisable in the ordinary shareholders’ meeting (2%, in the case of a listed company) or more than 25% of the company’s equity (5%, in the case of a listed company).

For capital gains realised from the sale for consideration of undevelopable land and buildings, the seller may request the application of a 26% substitute tax. Capital gains realised upon sale of properties held for more than five years are not subject to tax (see 1.4 Taxation of Real Estate Owned by Non-residents).

Interest on Italian government bonds, postal savings bonds issued by the Cassa Depositi e Prestiti and similar securities issued by international bodies, as well as interest on bonds issued by “white list” countries, is subject to a 12.5% substitutive tax.

Whenever a double taxation treaty is in force, the withholding tax rate on dividends and interest may be reduced.

Wealth Taxes

Different property taxes apply depending on the situs of the assets and investments and their nature.

Real estate

Real estatelocated in Italy is subject to Municipal Property Tax (IMU), a local tax applied to property ownership. Rates and exemptions vary depending on the municipality and the cadastral category of the property (with full exemption for the main abode, see 1.2 Exemptions);

Real estate located abroad is subject to tax on the value of real estate abroad (IVIE) at a rate of 1.06% applied on the purchase cost, if available, or the market value. With reference to real estate located in EU countries or EEA countries that guarantee an adequate exchange of information, the value is the cadastral value as determined and revalued in the country in which the real estate is located for the purpose of the local property or income taxes.

Financial investments

Financial investments located in Italy are subject to a 0.2% stamp duty (imposta di bollo). Savings/deposits are taxed at EUR34.20.

Financial investments located abroad are subject to tax on the value of financial assets (eg, stocks of foreign listed companies and units of UCIs) held abroad (IVAFE) at 0.2% (0.4% if the financial assets are held in a “black list” jurisdiction). Savings/deposits are taxed at EUR34.20.

Tax Monitoring Obligations on Foreign Assets

Selected financial and non-financial assets held abroad are to be reported in a special section of the annual income tax return (the so-called “RW Form”).

Foreign assets to be reported in the RW Form include (inter alia):

• holdings in the capital or equity of non-resident entities (eg, foreign companies and legal entities such as foreign foundations and foreign trusts);
• contracts of a financial nature entered into with non-resident counterparties, including loans and life insurance policies taken out with foreign insurance companies;
• real estate;
• precious metals; and
• artworks.

Italian Inheritance and Gift Tax

As a general principle, if a deceased/donor was an Italian tax resident at the time of his/her demise/donation, Italian inheritance and gift tax applies to the value of the transferred assets wherever they are located (worldwide taxation principle). Italian taxation applies also in case of transfer of assets located in Italy if the deceased/donor was not resident in Italy.

The obligation to pay Italian inheritance/gift tax lies on the beneficiaries of the transferred assets, regardless of their residence, and the applicable tax rates are determined on the basis of the degree of kinship between the deceased/donor and the beneficiary, with certain relevant allowances, as follows:

• 4%, on amounts exceeding EUR1 million for spouses and direct descendants and ascendants;
• 6%, on amounts exceeding EUR100,000 for siblings;
• 6% rate, with no tax-exempt threshold, for other relatives up to the fourth degree and in-laws up to the third degree;
• 8% rate, with no tax-exempt threshold, for all other recipients; and
• 4%, 6% or 8% depending on the relationship of kinship with the deceased/donor, on amounts exceeding EUR1.5 million, for transfers to a person with a disability.

Double Taxation Relief and Double Taxation Treaties

Domestic law provides for a tax credit for taxes paid abroad by Italian residents under the following conditions:

• earning of income produced abroad;
• contribution of foreign income to the formation of total income; and
• payment of foreign taxes outright.

Italy has an extensive network of double taxation treaties for income tax purposes, the vast majority of which provide for the tax credit method of eliminating double taxation.

Italy has entered into six double taxation treaties for inheritance tax purposes (with Denmark, the United Kingdom, Greece, Israel, the United States  and Sweden) and one for both inheritance and gift tax purposes (with France).

Special Tax Regimes for New Tax Resident Individuals

Italian legislation provides for different favourable tax regimes for individuals transferring their tax residence to Italy.

Flat tax regime for HNWIs (the “Flat Tax Regime”)

The Flat Tax Regime is available to all individuals, regardless of their nationality, who:

• become Italian tax resident; and
• were non-Italian tax resident for income tax purposes for nine out of ten years preceding their relocation to Italy.

Under the Flat Tax Regime:

• income sourced from foreign jurisdictions is subject to an annual substitutive tax of EUR100,000. The Flat Tax Regime is available to close family members of the applicant if they meet the eligibility requirements. Each family member included in the election is required to pay an annual substitute tax of EUR25,000;
• the taxpayer is not required to disclose foreign income and assets in the Italian income tax return;
• the taxpayer is exempted from the payment of IVIE and IVAFE;
• Italian inheritance and gift tax is due only in relation to goods and rights existing in Italy;
• an anti-abuse provision applies regarding capital gains realised in the first five years of validity of the Flat Tax Regime from the sale of “qualified” shareholdings (as defined above). In such a case, capital gains realised within the first five years are subject to Italian ordinary taxation; and
• it is possible to opt out on a country-by-country basis. Income from excluded jurisdictions is subject to Italian ordinary tax rules, and it would be possible to claim for a tax credit and for the benefits of the relevant double taxation treaty (if any).

On 10 August 2024, Decree-Law No 113 of 9 August 2024 came into force, providing for an increase in the annual flat tax from EUR100,000 to EUR200,000. The increase applies to those who transfer their residence for the purposes of Article 43 of the Civil Code after the decree comes into force.  Those who were already resident under Article 43 of the Civil Code on that date are not affected by the increase and will continue to pay the annual flat tax of EUR100,000 until the natural expiration of the Flat Tax Regime.

Article 43 of the Italian Civil code provides for the definition of domicile (domicilio) and residence (residenza). Domicile is the individual’s "principal place of business and interests". Residence is where an individual has his/her habitual abode.

The Flat Tax Regime terminates after 15 years. The applicant can revoke the election at any time in his/her tax return.

It is possible to file a preliminary tax ruling request to the Italian tax authorities to seek official confirmation in relation to the applicant’s eligibility for the Flat Tax Regime.

Flat tax regime for new resident pensioners (the “Pensioners’ Regime”)

The Pensioners’ Regime is available to all individuals, regardless of their nationality, who:

• have a pension income from a foreign (non-Italian) source;
• transfer their residence in Italy to one of the municipalities located in the regions of Southern Italy, or to a municipality included among those affected by seismic events, with no more than 20,000 inhabitants;
• have been non-Italian tax resident for five years preceding their relocation to Italy; and
• come from countries with which administrative co-operation agreements are in force.

Under the Pensioners’ Regime:

• income sourced from foreign jurisdictions is subject to an annual substitutive tax of 7%;
• the taxpayer is not required to disclose foreign income and assets in the Italian income tax return;
• the taxpayer is exempted from the payment of IVIE and IVAFE;
• it is possible to opt out on a country-by-country basis. Income from excluded jurisdictions is subject to Italian ordinary tax rules, and it would be possible to claim for a tax credit and for the benefits of the relevant double taxation treaty (if any).

The Pensioners’ Regime terminates after ten years. The applicant can revoke the election at any time in his/her tax return.

The inbound workers regime (the “Impatriati Regime”)

Income of workers who transfer their tax residence to Italy, up to the annual limit of EUR600,000, contributes to the formation of the overall income and taxation is limited to 50% of its amount if the following conditions are met:

• the workers undertake to reside in Italy for tax purposes for four years;
• the workers have not been tax resident in Italy during the three tax years preceding their relocation. However, if the activity is carried out for the same entity by which the worker was employed abroad before the transfer or for an entity belonging to the same group of companies, the minimum requirement for residence abroad is:
1. six tax years, if the worker has not previously been employed in Italy by the same entity or an entity belonging to the same group;
2. seven tax years, if the worker, prior to his/her transfer abroad, was employed in Italy by the same entity or an entity belonging to the same group;
• the work activity is performed for the greater part of the tax year in Italy; and
• the workers are highly qualified or specialised.

The Impatriati Regime terminates after five years.

Taxation of Trusts

General principles

Trusts are subject to Italian corporate income tax (CIT). Italian tax resident trusts are subject to CIT on their worldwide income. Non-resident trusts are taxed only on Italian-source income.

The definition of tax residence for trusts is derived from that provided for corporations (Art. 73, TUIR). A trust is considered resident in Italy for tax purposes if, for the greater part of the tax year, it has its place of effective management or its place of ordinary management in Italy (the third criterion provided for the tax residence of companies – the legal seat – is not applicable to trusts).

Trusts established in low-tax jurisdictions are considered to be resident in Italy, unless proven otherwise:

• when at least one of the settlors and at least one of the beneficiaries are tax residents in Italy; or
• when, subsequent to a trust’s establishment, a person resident in Italy attributes the ownership of immovable property or real property rights, including by shares, as well as destination bonds on the same.

For Italian income tax purposes, trusts are classified into the following main categories:

• transparent trusts, ie, trusts with identified beneficiaries, whose income is attributed and taxed on a transparency basis to the beneficiaries. The identified beneficiary is the holder of the right to request from the trustee the attribution of the part of the income that is attributed to him/her on a transparency basis;
• opaque trusts (or discretionary trusts), ie, trusts with no identified beneficiaries, whose income is taxed in the hands of the trust. In this case, the trustee has the discretionary power to choose whether, when, to what extent and to whom to attribute the trust income; and
• mixed trusts (both opaque and transparent), for example, where the trust deed provides that part of the income of a trust is set aside as capital and the other part is allocated to the beneficiaries.

As to the rules for determining the taxable base, trusts are distinguished into “commercial” trusts and “non-commercial” trusts depending on whether the trust is engaged in a business activity.

Trusts that are established and managed in order to achieve mere interposition in the possession of income are not considered as existent for tax purposes. The trust is fiscally disregarded (or interposed) if the power to manage and dispose of the assets remains wholly or partly with the settlor. In this case, the income (formally) produced by the trust continues to be attributed to the settlor. Italian tax authorities have identified certain “indicia” of tax interposition (Circular Letter No. 61/E of 27 December 2010), such as trusts whose settlor (or beneficiary) can terminate at any time, generally for his/her own benefit (eg, as revocable trusts), or trusts whose settlor (or beneficiary) is vested with powers as a result of which the trustee, while endowed with discretionary powers in the management and administration of the trust, cannot exercise them without the settlor’s (or beneficiary’s) consent.

Wealth taxes

Italian resident non-commercial trusts are subject to IMU (this is also due from commercial trusts) in relation to real estate owned in Italy, and IVIE and IVAFE in relation to assets held abroad.

Tax monitoring obligations

Italian resident non-commercial trusts are subject to tax monitoring obligations in relation to assets held abroad; thus, they are required to fill in the RW Form of the Italian tax return.

Inheritance and gift taxes

Circular Letter No. 34/E of 20 October 2022 of the Italian tax authorities clarified that inheritance and gift taxes are due from the beneficiary at the time of the final distribution of the trust assets to him/her by the trustee and not at the time of the attribution by the settlor to the trust. However, in some cases, the tax may be due before the final transfer to the beneficiary (thus, at the time of the settlement into the trust), whenever the identified (or identifiable) beneficiaries have full and enforceable rights, not subject to the trustee’s or settlor’s discretion, entitling them to enrichment and expansion of their legal and property sphere already at the time of the establishment of the trust.

Inheritance and gift tax rates and tax-exempt thresholds are determined based on the degree of kinship between the settlor and the beneficiary.

For the purposes of the territoriality of the inheritance and gift tax, the residence of the settlor at the time of the transfer of the assets to the trust is relevant.

Exemptions From Income Tax and Property Taxes

The main exemptions from income and wealth taxes include:

• the exemption on capital gains on the sale of properties held for more than five years (see 1.1 Tax Regimes and 1.4 Taxation of Real Estate Owned by Non-residents);

• the exemption on capital gains on the sale of properties received by succession (see 1.4 Taxation of Real Estate Owned by Non-residents);

• the exemption on capital gains on the sale of properties used as a main residence by the seller and his/her family for most of the period between purchase and sale (see 1.4 Taxation of Real Estate Owned by Non-residents);

• the exemptions from IMU for the main residence and certain types of properties (such as agricultural land and buildings used for cultural purposes); and
• the exemptions provided for individuals who transfer tax residence by benefiting from one of the special regimes described in 1.1 Tax Regimes.

Inheritance and Gift Tax Exemptions

Objective and subjective exemptions

Various objective and subjective exemptions are provided from inheritance and gift tax. Legislative Decree No. 346 of 31 October 1990 (Italian Consolidated Act on Inheritance and Gift Tax, TUS) provides for the following:

• transfers in favour of the State or a territorial public entity;
• transfers in favour of a non-territorial public entity;
• transfers in favour of a recognised foundation or association with public utility purposes;
• transfers in favour of non-profit organisations of social utility (ONLUS); and
• transfers in favour of specific entities such as banking foundations, non-governmental organisations and philanthropic entities.

TUS provides that certain assets – such as Italian government bonds and cultural heritage assets – are excluded from the hereditary estate and not counted for the purposes of the taxable base of the inheritance tax.

Transfers of businesses and corporate shareholdings

Art. 3, para. 4-ter, TUS, provides that transfers of businesses and shareholdings in companies and partnerships to spouses or descendants are exempted from inheritance and gift tax provided that:

• For shareholdings: the recipient acquires or reaches a controlling shareholding. The recipient must commit to maintain the control for five years following the transfer; and
• For businesses: the recipient must commit to continue the business activity for five years following the transfer.

Third sector entities

Gratuitous transfers to certain entities that qualify as “third sector entities” – such as volunteer organisations, social promotion associations and philanthropic entities – are exempt from inheritance and gift taxes provided that the donated assets are used to carry out the statutory activity for the exclusive pursuit of civic, solidarity and socially useful purposes.

General Considerations

Depending on the type of income-generating assets, wealth structure, goals and family composition, the Italian system offers different solutions for income tax planning, while also having regard to an asset protection perspective and succession planning.

Tax Step Up of the Value of Shareholdings and Lands for Capital Gains Tax Purposes

Individuals, partnerships, non-commercial entities and non-resident persons without permanent establishments in Italy were entitled to upvalue the cost or purchase value of shareholdings and lands held outside the business regime. The tax step up was executed through the payment of the 16% substitute tax (instead of the ordinary 26%) by 1 July 2024. Although the eligibility for this option expired on that date, over the years this provision has been renewed from time to time.

The Tax Regime of “Controlled Realisation” (Realizzo Controllato)

If certain conditions are met, Art. 177, paras. 2 and 2-bis, TUIR, provide a form of tax neutrality regime for contributions of shareholdings, based on their accounting classification in the financial statement of the receiving company.

Such tax neutrality regime has proven successful for corporate reorganisations and for the creation of family holding companies.

General Considerations

From a tax perspective, the most efficient way for an individual to purchase and hold residential properties is through direct ownership, since individuals may be entitled to certain benefits, especially in terms of reduction of transfer taxes.

Taxes Upon Purchase

One of the following alternatives may be applied to the purchase of a property in Italy:

• registration tax (imposta di registro) at the rate of 2% (if the primary residence tax benefit applies) or 9% of the purchase price of the property; or
• VAT at the rate of 4% (if the primary residence tax benefit applies), 10% or 22% on the purchase price of the property (in this case, registration tax is also applied at the fixed amount of EUR200).

In case of application of registration tax, it is also possible to apply the “cadastral value” (valore catastale, usually substantially lower than the market value) as taxable base, if the purchaser is an individual who is not acting in the context of a business activity.

Mortgage and cadastral taxes are also due (EUR50 each in case of application of registration tax or EUR200 each in case of application of VAT).

Capital Gains Upon Sale

For capital gains realised from the sale for consideration of undevelopable land and buildings, the seller may request the application of a 26% substitute tax. Capital gains realised upon sale of properties held for more than five years are not taxed.

Capital gains arising from the transfer of urban real estate units used as the main residence of the seller or his/her family members for most of the period between purchase and transfer are exempt from taxation, even if sold within five years from the purchase.

Rental Income

It is possible to opt for a regime of substitute taxation replacing personal income tax, regional and municipal surcharges, registration tax and stamp duties related to a rental agreement (cedolare secca).

The tax rate varies according to the type of contract. For ordinary leases it is 21%; for short-term leases it is 26% (or 21% on a short-term lease indicated by the taxpayer on the tax return).

In general, tax laws in Italy are considered stable, providing a certain level of predictability for taxpayers.

The main elements that currently make Italy attractive to private clients are not expected to be changed or repealed in the immediate future, namely: the Flat Tax Regime, low inheritance and gift taxes, and the absence of a proper wealth tax (other than those discussed in 1.1 Tax Regimes).

The Statute of Taxpayers’ Rights (Statuto dei diritti del contribuente, Law No. 212 of 27 July 2000) implements the principles of democracy and transparency of the taxation system.

Art. 3 of the Statute states that tax provisions do not have retroactive effect and, in any case, the adoption of interpretive provisions in tax matters may be enacted only in exceptional cases and by ordinary law, qualifying authentic interpretation provisions as such (Art. 1, para. 2).

In general, amendments to tax provisions that grant the enjoyment of certain regimes for a certain period of time provide for a grandfathering period until the originally envisaged expiration.

Italy has implemented various measures in line with international initiatives, such as:

• OECD Common Reporting Standard (CRS): Effective since 2017, CRS allows tax authorities in contracting states to automatically exchange information on financial accounts held by non-residents with the tax authorities of the account holders’ countries of residence. Italian financial institutions are required to report the information to the Italian tax authorities by 30 June of each year.
• Foreign Account Tax Compliance Act (FATCA): On 10 January 2014, Italy and the United States signed an Inter-Governmental Agreement (IGA), which was ratified by Law No. 95 of 18 January 2015. Specifically, Italy signed a Model 1 IGA. The FATCA implementation decree was issued by the Italian Ministry of Economy and Finance on 6 August 2015. Italian financial institutions are required to report the information regarding US persons to the Italian tax authorities by 30 June of each year.
• EU Directive DAC 6: Italy implemented EU Directive DAC 6 with Legislative Decree No. 100/2020, which introduces reporting obligations for tax advisers and businesses regarding potentially aggressive tax planning schemes.
• Public Registers of Beneficial Ownership (“UBO Register”): Italy introduced public registers of beneficial ownership to improve transparency of corporate ownership and prevent money laundering. Trusts are among the entities subject to reporting obligations. The Italian UBO Register became effective on 9 October 2023. However, on 17 May 2024, the Council of State (Consiglio di Stato, Administrative Court of Second Instance) suspended the implementing decree on the Register and all reporting requirements are suspended. The hearing for discussion is set for 19 September 2024.

The Italian entrepreneurial environment is mainly composed of small/medium-sized family businesses, and the management of the generational handover is of critical importance.

The family is a pivotal element of Italian entrepreneurship, and it is important that the family shares the values and guidelines of the family business for a succession that is as smooth as possible. To this end, instruments such as “Family Constitutions” may represent interesting tools to regulate the family’s founding values and the relationship between members and the family’s assets.

Although it is regulated in detail by the Italian Civil Code and is also a useful tool for mitigating, if not avoiding, inheritance disputes, drafting a Will is still not widely used.

Italian entrepreneurs are often reluctant to discuss topics such as their own succession and generational transition. These topics are often addressed at a late stage or in times of crisis, when certain issues could have been avoided by planning ahead.

The internationality of assets and families requires an analysis of the civil and tax laws of the jurisdictions involved, as well as the composition of the family.

Aspects to consider include:

• the opportunity to benefit from double taxation treaties;
• reporting requirements (CRS, FATCA, UBO Register); and
• the laws applicable to marriage, divorce and inheritance (eg, Italy has adopted both EU Succession Regulation No. 650/2012 and EU Regulation No. 2016/1103 on matrimonial property regimes).

General Principles

The rules governing succession in Italy provide that certain relatives – such as spouses and children – are considered forced heirs.

Forced heirs are entitled to a portion of the estate of the deceased composed by adding together the value of what the deceased had disposed of during his/her lifetime by way of donations and the value of what was in his/her possession at the time of the opening of the succession, net of any debt.

The heirs are appointed by virtue of law or by virtue of a Will, depending on whether the deceased has executed a Will before his/her death.

Intestate Succession

The Italian Civil Code distinguishes between different kinds of heirs on intestacy, namely:

• the surviving spouse or the surviving same-sex civil union partner;
• the descendants;
• the ascendants and other blood relatives of the deceased, eg, parents, grandparents, brothers and sisters; and
• collateral kin from the third to the sixth degree.

A surviving spouse, or a same-sex civil union partner, inherits:

• the estate as a whole, when the deceased leaves no descendants, ascendants or other blood relatives;
• one-half of the estate, when the deceased leaves one child;
• one-third of estate, when the deceased leaves more than one child. The remaining two-thirds is inherited by the children in equal shares; or
• two-thirds of estate, when there are no children but only ascendants or blood relatives.

If the deceased leaves no surviving spouse or same-sex civil union partner, his/her children inherit his/her whole estate.

In the absence of any other heir, the deceased’s estate devolves automatically on the State.

Testate Succession

If a deceased made a Will, the Will prevails over the rules of intestate succession. However, also in this case, the testator cannot dispose of his/her whole estate since the Italian succession law segregates part of said estate in favour of the testator’s close relatives. In particular:

• When there is only the surviving spouse (or surviving same-sex civil union partner): one-half of the testator’s estate is segregated (the remaining half represents the freely disposable portion).
• Where there are only descendants:
1. In case of a sole descendant: one-half of the estate is segregated (the remaining half represents the freely disposable portion);
2. If there is more than one descendant: two-thirds of the estate is segregated (the remaining third represents the freely disposable portion).
• Where the testator leaves the surviving spouse (or a surviving same-sex civil union partner) and:
1. a sole descendant, they are entitled to one-third each (the remaining one-third represents the freely disposable portion);
2. more than one descendant, one-quarter is for the surviving spouse (or civil union partner) and one-half for the descendants (the remaining quarter represents the freely disposable portion);
3. his/her parents, the surviving spouse (or civil union partner) is entitled to one-half, while the parents are entitled to one-quarter (the remaining quarter represents the freely disposable portion).
• Where the testator leaves only ascendants, they are granted one-third of the testator’s estate (the remaining two-thirds represent the freely disposable portion).

General Principles

The statutory property regime for married couples is the community of property regime. However, married couples can at any time switch to the separation of property regime.

Community of Property Regime

The Italian Civil Code identifies the community of property regime as the property regime applicable by virtue of law where the spouses or the same-sex civil union partners have not opted for the separation of property regime or for a conventional discipline of the estate owned under the community of property regime.

Under the community of property regime, the spouses or the civil union partners own in equal shares the property acquired, either jointly or severally, during the marriage or the civil union, unless that property can be considered a “personal belonging” of one of them.

Among others, the Italian Civil Code includes within “personal belongings” properties purchased before the marriage, and properties acquired during the marriage or the civil union by way of donation or of succession.

The property included in the community of property regime can be seized by the creditors of one of the spouses or civil union partners only once the personal estate of the latter has already been exhausted, up to the value of the common property’s share pertaining to the debtor and subordinately to the rights of the creditors of the common property.

Separation of Property Regime

Spouses (and civil union partners) may opt for the legal separation of property regime, under which the spouses remain the exclusive owners of the property acquired by them both before and after the marriage.

Conventional Community of Property

Conventional community of property is a regime of legal community of property modified by mutual agreement between the spouses, within certain limits.

Pre-nuptial Agreements

Pre-nuptial agreements are not provided for by Italian law. The Italian Supreme Court has always deemed null and void any agreement made in contemplation of a future divorce.

Transactions that do not result in taxable capital gains include gratuitous transfers, such as successions and gifts.

With reference to shareholdings, taxable capital gains are determined as the difference between consideration received and cost or the purchase value subject to taxation, increased by any charge inherent in their production, including inheritance and gift tax, excluding interest expense.

In the case of acquisition by inheritance, the value defined or declared for inheritance tax purposes is assumed to be the cost. For shareholdings exempt from inheritance tax, the fair value at the date of the opening of the inheritance is adopted.

In the case of acquisition by donation, the donor’s cost is assumed as the cost.

The Italian legal and tax system provides some tools that allow taxation on transfers of assets to be reduced or postponed, if not eliminated altogether.

Donation of Bare Ownership

The usufruct is a right in rem of enjoyment of another person’s property, consisting of the right of a person to enjoy an asset owned by another person and to collect its benefits/profits/proceeds, under the obligation not to alter its economic use. Such a right is limited in time and cannot exceed the life of the usufruct holder.

The owner of an asset may transfer bare ownership to others, retaining for him/herself the right of usufruct. Upon expiry of the agreed term or the death of the usufruct holder, the bare owner becomes the full owner of the asset.

The value of bare ownership of a property corresponds to the total value of full ownership, less the value of the usufruct right, calculated according to certain criteria.

From an inheritance/gift tax standpoint, the taxable base is equal to the value of the full ownership less the value of the usufruct. The future consolidation of bare ownership with usufruct upon death of the usufruct holder will not represent a taxable event for the beneficiary/bare owner.

Life Insurance Policy

Life insurance policies are, to a certain extent, tax-efficient in Italy and are increasingly being used as investment/wealth planning vehicles.

Income taxation is deferred at the time of the partial or full surrender or at the time of the payment to the beneficiary. However, no income tax is levied on the portion referred to demographic risk of the policy.

In case of death of the insured person, the amount paid to the beneficiaries is collected out of inheritance rules and consequently is excluded from inheritance tax.

Trusts

Trusts are vehicles for preserving family assets for future generations. Italy is a trust-friendly jurisdiction both from a civil law perspective – recognising asset segregation (see 3.2 Recognition of Trusts) – and from a tax perspective (see 1.1 Tax Regimes). Trusts are recognised and enforced in Italy by virtue of the Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition, ratified under Law No. 364 of 16 October 1989, which came into force on 1 January 1992 (the “Hague Convention”, see section 3.2 Recognition of Trusts).

Transfers of Businesses and Corporate Shareholdings Through Family Pacts (Patti di Famiglia)

A family pact (patto di famiglia) is an agreement whereby an entrepreneur or shareholder transfers, while alive, his/her enterprise/shareholdings to one or more of his/her heirs.

The family pact shall be executed in the form of a public deed, by and among the entrepreneur/shareholder, his/her spouse (or civil union partner) and any other person that could be considered heir of intestacy in his/her respect, should the entrepreneur/shareholder have died at the time of the family pact’s execution.

The parties to whom the enterprise/shareholding expressly devolves by means of the family pact shall pay to the other parties a sum equal to their compulsory portion, unless the other parties waive their right to such payment. The goods received by each party are imputed to the compulsory portion of the relevant party and are exempt from re-integration and/or reduction.

A transfer of enterprise or shareholdings may benefit from the exemption from inheritance and gift tax provided by Art. 3, para. 4-ter, TUS (see 1.2 Exemptions).

Circular Letter No. 30/E of 27 October 2023 of the Italian tax authorities clarified that gratuitous transfers of crypto-assets are relevant for the application of inheritance and gift tax.

The tax base is determined by taking the market value in common trade on the date of the donation or succession. This value is taken from the platform of the exchange where the crypto-assets were originally purchased or from a similar platform where the same crypto-assets are tradable.

With reference to the territoriality of the tax, crypto-assets held with platforms providing services related to the use of virtual currency and providers of digital wallet services resident in Italy, as well as crypto-assets held on a storage device located in Italy, are considered as located in Italy for the purposes of application of Italian inheritance and gift tax.

Given the nature of such assets, whereby the loss of private keys may result in  the wallet’s inaccessibility, advisable actions for the purposes of crypto-asset succession include indicating them in a Will, holding them through a trust or entrusting them to a custody agent.

Trusts

The trust is a wealth planning vehicle that is being increasingly used in Italy, and recent clarifications by the Italian tax authorities (see 1.1 Tax Regimes), preceded by established case law, have provided greater certainty regarding the tax treatment.

To date, there is no organic regulation of trusts in domestic law.

Trusts may be distinguished according to their different uses and purposes, for example:

• a “purpose trust”, established for the pursuit of a specific purpose identified by the settlor;
• a “family trust”, established for asset protection and succession planning;

• a “Dopo di Noi trust” (“After Us Trust”), established for the benefit of individuals with severe disabilities in compliance with the requirements of Law No. 112 of 22 June 2016 ( the “After Us Law”, Legge sul Dopo di Noi);

• a “guarantee trust”, established to protect the interest of one or more creditors of the settlor; and
• a “liquidating trust”, established to carry out the liquidation of the assets of the settlor.

It is worth noting that the Council of Ministers of 9 April 2024 approved, in a preliminary discussion, a legislative decree that would introduce provisions for the rationalisation of registration tax, inheritance and gift tax, stamp duty and other indirect taxes other than VAT. Among the various measures, by amending the TUS, it would recognise the relevance of attributions to a trust for inheritance and gift tax purposes, confirming legislatively that the taxable event is the final attribution of assets to beneficiaries with the possibility, alternatively, for the settlor – or the trustee of a testamentary trust – to opt for immediate taxation of the deed by which assets are transferred to the trust. To date, these changes have not yet been implemented.

Foundations

Italian foundations are generally used for social purposes only and are strictly regulated by the public authorities.

A foundation can be regarded as an efficient way to preserve important cultural and artistic heritage (eg, it can be used to set up a family museum).

A foundation is a legal entity whose main purpose is to assist a social, cultural or charitable need, and thus, the assets of the foundation have to assigned for the specific goal for which it was incorporated.

Foundations are subject to CIT and, to such end, can qualify as a commercial or non-commercial entity. If the foundation carries out certain qualified activities or qualifies as an ONLUS or third sector entity, it may not be subject to CIT. (For the sake of completeness, it should be noted that the reform of the third sector repeals the provisions on ONLUS. ONLUS may decide whether to adapt to the third sector regulations and become third sector entities.)

Trusts have no specific civil law discipline in Italy and are recognised under the Hague Convention.

As there is no domestic legislation relating to trusts, they can only be established in Italy in accordance with the Hague Convention and subject to a foreign governing law.

The Italian Supreme Court of Cassation (No. 9637 of 19 April 2018) has confirmed that trusts are not atypical arrangements and are recognised in our legal system following the ratification of the Hague Convention.

Income Taxation

The tax implications for beneficiaries tax resident in Italy depend substantially on whether the trust is “opaque” or “transparent” (see 1.1 Tax Regimes) and whether the trust is tax resident in Italy or not.

Italian resident opaque trusts

Income of an Italian resident opaque trust is taxed in the hands of the trust (subject to CIT), and future income distributions are not taxable in the hands of the beneficiaries.

Non-Italian resident opaque trusts

The taxation on Italian resident beneficiaries of income distributions to them from non-resident trusts depends on whether the trust is established in a low-tax jurisdiction.

If the opaque trust is established in a State or territory which, with respect to income produced there, is subject to taxation of less than half of that applicable in Italy, attributions of income by the trust to the beneficiary are subject to taxation in the hands of the beneficiary on a cash basis.

Distributions from “white list trusts” are not subject to income taxation for Italian resident beneficiaries.

Such provisions apply also to trust-like entities, ie, entities having the same characteristics as a trust (such as certain foundations).

Italian resident transparent trusts

Income of transparent trusts is imputed by transparency to the beneficiaries regardless of the actual distribution. The subsequent distribution, even if it occurs in a later year, does not result in further taxation for the beneficiaries.

Non-Italian resident transparent trusts

Income imputed to the Italian resident beneficiary is taxable in Italy in the hands of the beneficiary regardless of whether the income is generated in Italy or not.

Trustees

The trustee is not subject to taxation for income generated by the trust.

Inheritance and Gift Tax

Inheritance and gift taxes are due from the trust beneficiaries if the settlor was an Italian resident at the time of the attribution of the asset to the trust – regardless of its location – or if the asset is located in Italy if the settlor was not an Italian resident at the time of the attribution to the trust (see 1.1 Tax Regimes).

Trustees

Trustees are not subject to Italian inheritance and gift tax in relation to assets settled into a trust.

The settlor’s retention of control over the assets placed into a trust as well as his/her influence over the trustee’s actions can have adverse tax implications and, often, these factors have been used by Italian courts to disregard the effects of the trust for civil law purposes.

However, there are tools and strategies designed to ensure the implementation of the settlor’s wishes. These include:

• appointment of a protector or a protectors’ committee;
• letter of wishes; and
• setting up a family private trust company.

The choice of estate planning method depends on factors such as the composition of the family’s assets (movable, real estate, family business), the composition of the family, the number of generations expected to be involved in the short to medium term and their interest in being involved in the management of the family’s key assets.

Generally, the decision-making process concerning which strategy to adopt requires a series of steps which can be summarised as follows:

• mapping family wealth;
• identifying and focusing on goals;
• preserving generational continuity (or selling the family business to enter into new industries); and
• evaluation of potentially applicable solution(s).

From a mere asset protection perspective, the Italian Civil Code provides some instruments to achieve the interests of the family and the achievement of worthy purposes, such as:

• Patrimonial fund (fondo patrimoniale): A special estate and property fund can be created by the spouses (or civil union partners) to cover the needs of their family (or of the civil union). Spouses (or civil union partners) cannot dispose of the assets in the fund in a way that conflicts with the family purposes to which they are bound, and creditors cannot seize the assets in the fund for debts they knew were incurred for purposes unrelated to family interests.
• Destination bond (vincolo di destinazione): Certain registered movable and immovable assets may be allocated, for a span of time not exceeding 90 years or the life of the beneficiary individual, for the accomplishment of a goal that is considered worthy by the law. Through the establishment of the destination bond, the assets placed therein can be seized only for satisfying the debts incurred for the accomplishment of said goal. The creditors of the settlor have no access to such assets and they are not included in the community property of the married couples.

Corporate vehicles may also be used to achieve asset protection objectives. Setting up a simple partnership (società semplice) is a common way to hold financial and immovable assets. Assets held by the partnership are not seizable by the partners’ creditors. The creditor may: (i) enforce his/her rights to the profits payable to the shareholders; or (ii) demand liquidation of the shareholders’ shares if the debtor’s other assets are insufficient. There is no obligation to keep accounting or administrative records, nor records of any shareholder agreements. It is possible to provide administrative rights that are not proportional to economic rights.

The key to successful estate planning lies in combining the opportunities offered by civil and tax law with a long-term perspective.

Instruments used for succession purposes under civil law include:

• The family pact (see 2.6 Transfer of Assets: Vehicle and Planning Mechanisms).
• Corporate vehicles: Setting up a holding company may be a way to remove any conflicts between heirs from the operating companies, shifting them to another layer. The structure of the holding company enables the determination of rules of governance of the family estate, through which it is possible to distinguish between powers of management and enjoyment of economic rights. Moreover, through the gift of bare ownership (see 2.6 Transfer of Assets: Vehicle and Planning Mechanisms), it is possible for the usufruct holder to retain control of administrative and economic rights by anticipating the transfer of share ownership.

From a tax perspective, the legislation offers support for generational transitions from both an income tax and an inheritance and gift tax perspective. For example:

• Income tax: neutrality regime for contributions of shareholdings for setting up family holding companies (see 1.3 Income Tax Planning);
• Inheritance and gift tax: exemption for transfers of businesses and shareholdings – also through a family pact – to spouse and descendants (see 1.2 Exemptions).

The transfer of shareholdings is subject to registration tax in a fixed amount (EUR200) and stamp duty (EUR15). Any minority discount applied in negotiation is not relevant for transfer tax purposes.

In addition, transfers of shares in Italian joint stock companies may also be subject to a tax on financial transactions (the so-called “Tobin tax”) of 0.2% (or 0.1% if the transfer takes place in regulated markets and multilateral trading systems) due from the purchaser. The taxable base is the value of the transaction, ie:

• the value of the net balance of daily settled transactions related to the same financial instrument and concluded on the same business day by the same person; or
• the price paid.

In Italy, disputes over inheritance matters may lead to claims of violation of the compulsory share (see 2.3 Forced Heirship Laws).

A violation of the compulsory share may occur, for example:

• when a testator has disposed of more than the freely disposable portion; or
• where other heirs with forced heirship rights receive more than they are entitled to (for example, through donations received during the lifetime of the deceased).

Even contributions to a trust may in principle violate the Italian forced heirship rules, for example, when one of the forced heirs is not included among the beneficiaries of the trust.

Given the increased international mobility of families, recent years have seen cases aimed at ascertaining the law applicable to succession.

When the right of a forced heir to his/her compulsory share of the deceased’s estate is violated, the heir may file an action for the reduction (azione di riduzione) of the testamentary provisions and/or the donations made by the deceased during his/her lifetime.

If successfully brought, the action for reduction may be followed by an action for “restitution” (azione di restituzione) against the beneficiaries of the disposition.

To avoid litigation, the parties may come to an agreement on reinstatement of the violated compulsory share: on the one hand, the aggrieved heir may renounce the lawsuit; or on the other hand, the counterparty may transfer, in mitigation of any claim, assets of his/her own or of the inherited estate.

Fiduciary Companies

Corporate fiduciaries are a widely used in Italy because they enable various objectives to be achieved, such as:

• confidentiality, as the assets are formally in the name of the fiduciary; and
• tax simplification, as the fiduciary company acts as a tax withholding agent, and income from assets held in its name does not have to be reported on the principal’s tax return; likewise, foreign assets held in the fiduciary’s name are not subject to tax monitoring obligations (no filling out of the RW Form).

Corporate fiduciaries carry out activities of administration and management of assets, although they do not own them. Ownership, in fact, remains with the third party who has entrusted the fiduciary company.

Depending on the type of business conducted, trust companies can be categorised into:

• Fiduciary companies carrying out static administration: These exercise administration and supervision of the assets entrusted by the client, while complying with the instructions given by the client for each transaction; and
• Fiduciary companies carrying out dynamic administration: These manage assets, being granted broad discretionary powers over those assets (eg, they can dispose of assets, purchase others and reinvest any profits earned).

Fiduciary companies need special authorisation, issued by a Ministerial Decree of the Ministry of Economic Development and with the favourable opinion of the Ministry of Justice (in the presence of the requirements of Ministerial Decree of 16 January 1995). Also, the Ministry of Economic Development carries out supervision activities on fiduciary companies.

Fiduciary companies engaged in the custody and administration of securities are required to be registered in a special section of a register kept at the Bank of Italy and are subject to supervision by the Bank of Italy. This entails being subject to several internal control requirements, with specific reference to anti-money laundering regulations.

Trust Companies

In Italy, trust companies specialise in establishing and managing trusts by providing trustee services in a professional manner.

The activity of trustees is not regulated and can also be carried out by non-professional trustees.

Fiduciary Companies

Ministerial Decree of 16 January 1995 states that the clauses of the fiduciary mandate shall mandatorily provide for, inter alia:

• liability for the fiduciary company’s breach of duty as governed by the rules of the Italian Civil Code on diligence in the performance of obligations and the diligence of the mandatary (the mandatary is required to execute the mandate with the diligence of a good father of a family); and
• the obligation of the fiduciary company to be responsible for the actions of its collaborators whose services the principal authorises it to use in the performance of the assignment.

In addition, fiduciary companies are subject to supervision by the competent authorities (see 6.1 Prevalence of Corporate Fiduciaries).

Trust Companies

The liability of the trustee may differ depending on the governing law of the trust chosen. It is common for specific provisions to be included in the trust deed to exempt the trustee from liability in the event of loss of the trust fund not attributable to the trustee’s misconduct or breach of trust, as well as the use of indemnities for the trustee in case of final distribution and termination of the trust or change of trustee.

Fiduciary Companies

Except for the obligations and requirements described in the previous sections 6.1 Prevalence of Corporate Fiduciariesand 6.2 Fiduciary Liabilities, Italian legislation does not provide for an ad hoc regulation concerning investment of assets by fiduciary companies. The relationship between a principal and a fiduciary company is regulated by a contractual agreement containing instructions as to the type of investments that can be made and the way the assets are managed. This last aspect will depend on the type of mandate granted, ie, static or dynamic (see 6.1 Prevalence of Corporate Fiduciaries).

Trust Companies

Usually, the trust deed and the governing law contain regulation on how the trust assets shall be invested.

Fiduciary Companies

Usually, assets administered include mainly securities, financial instruments and foreign insurance policies. It is not common for real estate to be held in the name of a fiduciary company.

There is no standard or investment theory applicable to investments held through a fiduciary company, and diversification is not required. Especially with reference to the “static” fiduciary mandate, the fiduciary company acts according to the instructions of the principal.

Trust Companies

Trusts can hold any type of asset, and – in accordance with the provisions of the trust deed – the trustee has discretion in managing and investing the trust fund. No specific authorisation is required to hold active businesses.

Residence and Domicile

Art. 43 of the Italian Civil Code provides for the definition of residence and domicile of individuals.

Residence is the place where an individual habitually resides. The application for residence is filed to the municipality to which the applicant moved within 20 days from the relocation.

Depending on the municipality, the declaration of residence can be submitted through the national registry portal using a digital identity, via email, or by in-person appointment, submitting the following documents:

• a valid passport or identity card (for EU citizens) or a residence permit (for non-EU citizens);
• the Italian tax identification number (Codice Fiscale); and
• documents proving ownership;possession or availability of a property, to establish habitual residence.

Domicile is the place where a person has established the main centre of his/her affairs and interests. Establishing domicile in Italy primarily involves two elements: an objective one, concerning economic, moral, social and family relations; and a subjective one, based on the individual’s intention to centre his/her affairs or interests in a particular location. In some cases, domicile is determined by law, such as for minors who are legally domiciled with the parent exercising parental authority. Choosing a domicile does not follow any formal procedure and does not require registration with the Registry Office.

Citizenship

Italian citizenship may be acquired:

• by descent (bloodline, jure sanguinis);
• by birth jure soli, if born in the Italian territory to stateless parents or if the parents are unknown or unable to pass on their citizenship to the child according to the law of their country of origin;
• by marriage, if marrying an Italian citizen;
• through adoption by Italian parents; or
• by continuous residence in Italy:
1. for at least four years in the case of EU citizens; or       
2. for at least ten years in the case of non-EU nationals, who must meet the following requirements: sufficient income for sustenance, absence of criminal records, and no impediments to the security of the Italian Republic.

Italy does not provide for expedited citizenship procedures (such as citizenship through investment programmes).

Law No. 112 of 22 June 2016 (the “After Us Law”, Legge sul Dopo di Noi) was enacted with the aim of protecting individuals with severe disabilities who are without family support or for the time when such support will cease.

The After Us Law, inter alia, provides for several benefits with reference to the establishment of trusts having as sole beneficiaries people with severe disabilities with the purpose of protecting said beneficiaries and financially supporting their “life project”.

Assets and rights placed in trusts established for the benefit of people with severe disabilities are exempt from inheritance and gift tax.

The same favourable regulations also apply to destination bonds under Art. 2645-ter of the Civil Code (see 4.1 Asset Protection) and to contracts of trusteeship (contratti di affidamento fiduciario), ie, those contracts through which one party (the “entrustor”, affidante) agrees with another party (the “entrustee”, affidatario) to identify certain assets to be used for the benefit of one or more parties under a programme established by the entrustor and implemented by the trustee, having the same purpose of supporting persons with severe disabilities.

The protection measures provided for by Italian law are:

• Support administration (amministrazione di sostegno): A person unable to provide for his/her own interests, due to an infirmity or a physical or psychic impairment, may be assisted by a “support administrator” (amministratore di sostegno) appointed by the Guardianship Judge (Giudice tutelare), by means of a special decree, with ordinary and extraordinary management tasks in favour of the beneficiary. The beneficiary remains capable of performing all acts that do not require the representation or assistance of the support administrator.
• Interdiction (interdizione): A status of habitual mental incapacity may, by order of the judge, be declared for persons incapable of looking after their own interests. This includes not only persons suffering from habitual mental incapacity, but also those who prove incapable of looking after their own interests.

• Incapacity (inabilitazione): This status of reduced capacity to act may be declared by the court  of a person of full age who, due to his/her mental condition (not so serious as to entail interdiction), is unable to look after his/her own interests.

It is possible for a preference for a person to serve as guardian to be indicated in a deed or Will. In this case, the courts usually take this into account by preferentially choosing a person in the same family circle as the beneficiary of the measure.

Law No. 104 of 5 February 1992 provides for a comprehensive framework for assistance, social integration and rights of persons with disabilities.

In addition, on 19 March 2024, Legislative Decree No. 29 of 15 March 2024, implementing the reform of the elderly care system, came into effect. Among other things, Legislative Decree No. 29/2024 provides for:

• the promotion of the use of preventive healthcare and telemedicine tools in the provision of care services to maintain the best living conditions of the elderly person at home, with priority reference to the very elderly person with at least one chronic condition;
• the access to palliative care guaranteed to all non-autonomous elderly individuals with a chronic, evolving disease for which there are no therapies or, if they exist, which are inadequate or ineffective for the purpose of stabilising the disease or significantly prolonging life; and
• the recognition for two years (from January 2025 to December 2026) of a “universal benefit” for the severely dependent over-80s. This includes a care allowance worth EUR850, in addition to the EUR531.76 of the support allowance, for a total of about EUR1,380 per month.

From a tax point of view, a deduction from personal income tax at the rate of 19% is provided for expenses incurred for personal care attendants in cases of non-autonomy of the disabled person in performing acts of daily living. The deduction is calculated on an amount of expenditure not exceeding EUR2,100 and is payable only when the taxpayer’s total income does not exceed EUR40,000.

Law No. 219 of 22 December 2017 introduced the instrument of a Living Will (testamento biologico), allowing individuals to express their wishes regarding medical treatments and end-of-life care in the event that they become unable to communicate their decisions. It would be possible to appoint a healthcare proxy to take decisions according to the instructions outlined in the Living Will.

Children born out of wedlock (if recognised) and adopted have the same rights, including for inheritance purposes, as children born to married couples.

No share of the inheritance is due to an unrecognised child, but he/she may file a court action to obtain recognition even after the death of the alleged parent.

As to posthumously conceived children, in order to obtain recognition of paternity or maternity, a legal claim has to be brought before the Civil Court. Italian law allows a person to have paternity (or maternity) declared by judgment, even if the alleged father (or mother) is already deceased.

In Italy, surrogate pregnancy constitutes a prohibited medical practice, punishable by imprisonment and a fine.

Law No. 76 of 20 May 2016 (“Cirinnà Law”), which came into force on 5 June 2016, regulates same-sex civil unions, recognising almost all the rights granted to married couples (eg, marital and inheritance rights), with some exceptions, the most relevant of which is adoption. Civil unions are not granted the possibility of adopting children.

Taxpayers who make charitable donations to certain categories of entities of special social relevance are entitled to tax benefits in the form of tax deductions (from 19% to 35%) or in the form of deductions from taxable income or, in certain cases, in the form of tax credits (eg, in the case of a donation in support of culture, the so-called “art bonus”).

In addition, donations to charitable entities (eg, third sector entities) are exempt from inheritance and gift taxes (see 1.2 Exemptions).

Historically, the most widely used instrument for carrying out philanthropic and charitable activities has been the foundation (see 3.1 Types of Trusts, Foundations or Similar Entities).

A foundation may qualify as a third sector entity if it is pursuing, on a non-profit basis, civic, solidaristic and socially useful purposes and enrols with the Single National Register of the Third Sector (Registro unico nazionale del Terzo settore, RUNTS).

Trusts have also been used to carry out charitable activities as they have been allowed to qualify as ONLUS. However, following the reform of the third sector by the Ministry of Labour, in its Circular Letter No. 9/2022, as of the time of writing, trusts cannot qualify as third sector entities and benefit from the related advantages, including tax benefits.