Exemption from Registration Tax for Assets Subject to Collation and Its Application to Indirect Gifts

Legislative Decree No. 139/2024 has introduced significant amendments to Article 34 of the Consolidated Law on Registration Tax (TUR), particularly concerning the taxation of assets subject to collation during inheritance partition. The new regulation has sparked considerable discussion regarding the applicability of the exemption from registration tax, especially for assets that, although not falling within the category of direct donations, are considered indirect gifts pursuant to Article 1, paragraph 4-bis of the Consolidated Law on Succession and Donation Tax (TUS).

In the context of this reform, the key issue is whether the exemption may also apply to indirect gifts, such as those governed by Article 1, paragraph 4-bis of the TUS, which are not subject to gift tax.

Direct Donations and Indirect Gifts

A donation and an indirect gift are two different legal means through which one person can enrich another, but they present important legal differences.A donation is a contract by which a donor voluntarily and gratuitously enriches a donee, thereby reducing their own assets. It must be executed by public deed before a notary and witnesses, and is subject to specific taxes on the transaction. An indirect gift, by contrast, enriches another person through legal mechanisms other than the formal donation contract. It is not a contract but occurs through other legal acts—for instance, when a parent pays for a son’s home. Taxes apply to the purchase of the property but not to the underlying gratuitous transfer.

Treatment of Direct Donations and Indirect Gifts at the Time of Collation

Consider a case where Tizio donates a property to his son Caio with a notary deed. To his other son, Sempronio, he instead pays for a property. In Sempronio’s case, the gift was made through the payment of money, without a notarial deed, and thus was not subject to gift tax.The legal issue raised concerns the treatment of both types of transfers—traditional donations and indirect gifts—during collation.

The question arises as to whether assets transferred through indirect gifts may still benefit from the exemption from registration tax applied to assets subject to collation, despite their different legal nature. However, both case law and administrative practice tend to confirm that indirect gifts are included in the calculation of the estate’s total value and, in this regard, are treated similarly to direct donations. Therefore, there appears to be no substantive reason to justify a different fiscal treatment for the two types of assets.

It is important to note, however, that Article 1, paragraph 4-bis of Legislative Decree No. 346 of October 31, 1990, subjects indirect gifts to inheritance tax, unless they are related to acts involving the transfer or creation of real or personal rights or the transfer of businesses, where such acts are already subject to proportional registration tax or VAT.

Interpretation of the Rule

According to the findings in Legal Study No. 120/2024, the legislative change concerning the exemption for assets subject to collation does not directly affect the taxation of the initial donation but is instead aimed at rationalizing the system for determining the taxable base. It does not exclude from this base assets received through indirect gifts.

As a result, the exemption is not limited to directly donated assets but also extends to indirect gifts, even if they are not subject to gift tax.The legislator appears to have adopted a broader approach, recognizing the role of collation in the context of inheritance division, without introducing a distinction between direct and indirect donations for the purposes of calculating the estate’s total value.

It is also important to emphasize that although such assets are not subject to gift tax, their inclusion in the estate can affect the shares allocated to each heir.

Conclusions

The amendment to Article 34 of the TUR, introduced by Legislative Decree No. 139/2024, clarifies that the exemption from registration tax during inheritance division for assets subject to collation is not limited to assets that were subject to gift tax. It also applies to indirect gifts, as all types of transfers contribute to determining the overall estate value.