Italian Supreme Court Rules No Inheritance Tax on those Renouncing Inheritance
The Court of Cassation (Italian Supreme Court) affirmed, with the recent ordinance no. 21006 of 22 July 2021, that tax obligations do not apply to those renouncing inheritance, even for heirs in succession by law or those who made a declaration of succession.
According to the judges, “a person called to an inheritance, who has validly renounced it, is not liable for tax debts of the deceased, not even for the period between the opening of succession and the renunciation even if they are among the successors by law or have submitted the declaration of succession (which does not constitute acceptance), since the renunciation is considered retroactive pursuant to article 521 of the civil code, and he/she is considered to have never been part of succession and must no longer be counted among those in succession”.
The appeal of the revenue agency and the decision of the Court
The ruling ultimately rejected the appeal of the revenue agency. The latter argued that since the ten-year time limit to revoke the waiver had not elapsed, the heir in this particular case still owed inheritance tax. On the basis of this assumption, the agency had notified the defendant of taxes (IRES, IRAP and VAT) due on a company owned by the deceased.
An appeal was then filed with the provincial tax commission, which in turn rejected it. The regional tax commission accepted instead the taxpayer’s complaint. The commission focused on the renunciation of the inheritance. It concluded that it was impossible to consider the heir an owner of the business and therefore not liable for tax debts on that business.
In its July ruling affirming the decision of the regional tax commission, the Court declared that those renouncing inheritance cannot be considered holders of the deceased’s debt. Not even in the tax obligations field, due to the fact that tax authorities have other means of collecting the necessary taxes, such as challenging the waiver or requesting the appointment of a trustee to the existing inheritance.