October brought a couple of positive news for those who are planning the distribution of their assets.
First of all, with Circular No. 29 of 19 October, the Revenue Agency finally acknowledged that in the current Inheritance Tax system the so-called Reunion for Inheritance Tax purposes (coacervo successorio) is no longer applicable.
This is the obligation to add to the value of the estate the discounted value of the donations made during the lifetime of the deceased to the heirs and legatees. In the previous Inheritance Tax system, this rule meant to allow the application of the Inheritance Tax at progressive rates by brackets.
The Revenue Agency, having taken note of the case law of the Supreme Court, with Circular 29 finally acknowledged that the Reunion for Inheritance Tax purposes is deemed to be implicitly repealed, with the consequence that it can no longer be used for the purposes of calculating the Inheritance Tax nil rate band.
Therefore, in the absence of the Reunion, the value of the donations made by the deceased should no longer be added to the value of the estate, in order to apply the Inheritance Tax nil rate band of one million euros (for the benefit of the spouse and relatives in the direct line) or 100 thousand euros (for the benefit of brothers and sisters).
In practice, since the same nil rate band is provided for in the case of Inheritance Tax and Gift Tax, the absence of the Reunion allows the nil rate band to be doubled. Indeed, it is possible to apply the nil rate band for the purposes of the Gift Tax due for the donations received during the life of the donor and use it again upon his death for the purposes of the Inheritance Tax.
The Revenue Agency recognized the repeal of the Reunion for Inheritance Tax purposes, but the Reunion for Gift Tax purposes has not been touched, with the consequence that at the time of a donation it is always necessary for the purposes of calculating the Gift Tax nil rate band to take into account previous donations made to the same beneficiary, with the sole exception of donations made between 25 October 2001 and 28 November 2006 when the Gift Tax was not in force.
Another important novelty comes from the legislator who has expressed the intention (if not already with the budget law, in a subsequent bill) to abolish the action for restitution of donated assets that exceed the share due to the legitimate heirs (legittimari). The possibility of being subjected to such action has always limited the circulation of donated goods, save the possibility to stipulate an insurance contract to manage the risk.
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