Tax Treatment of Usufruct Credit on Corporate Shares in Inheritance

The Italian Tax Agency, in response no. 30/2025, clarified the tax treatment of inheritance tax on a credit deriving from the usufruct of a corporate shareholding when the usufructuary dies after the resolution to distribute profits but before their actual disbursement.

The Case Under Review

The issue concerns a taxpayer (Tizio) who held the usufruct right on a 17.5% shareholding in a

company (X S.p.A.), while his children (Caio e Sempronio) owned the bare ownership. In 2024, the company resolved to distribute an extraordinary reserve of €50 million, allocating €8.75 million to Tizio’s share. However, Tizio passed away before the payment was made.

As a result, the children inherited the right to collect the sum and sought clarification from the Tax Agency regarding:

1. How to declare the usufructuary's credit in the inheritance tax return – should they declare the entire amount due to their father or only part of it, considering they were already bare owners?

2. How to determine the taxable base for inheritance tax – should they consider the gross amount (€8.75 million) or the net amount after the 26% withholding tax (approximately €6.48 million)?

Tax Agency’s Opinion

The Agency confirmed that the credit due to the usufructuary for the distribution of the extraordinary reserve is part of the inherited assets. However, it clarified that:

• The right to receive dividends had already accrued to the usufructuary on the date of the distribution resolution.

• Upon his death, the credit transferred to the heirs, who became its rightful holders.

• The amount must be declared in the inheritance tax return for the actual amount received, meaning the net amount after the 26% withholding tax applied by the company.

• The inheritance tax, set at 4% for direct relatives, applies to the taxable base corresponding to the net amount received by the heirs.

This interpretation prevents double taxation, ensuring that the heirs are not required to pay both the 26% withholding tax on dividends and inheritance tax on the full gross amount.

Conclusion

The Revenue Agency’s response provides an important clarification on the tax treatment of amounts due to a usufructuary in the event of inheritance, establishing that the amount subject to inheritance tax is the net sum effectively received by the heirs, after taxes have already been applied. This approach ensures fairer tax treatment, avoiding overlaps between income tax and inheritance tax.