Italy-Germany-France cross-border gifts: 2026 tax guide

I. The Italian gift-tax regime after the D.Lgs. 139/2024 reform: a generous framework with worldwide reach

A. The 1 January 2025 reform: codification, self-assessment and abolition of the coacervo successorio

The Italian reform of the gift tax (imposta sulle donazioni) was carried out by Legislative Decree no. 139 of 18 September 2024, published in the Gazzetta Ufficiale on 2 October 2024, and applies to all successions opened and gifts made from 1 January 2025 onwards. Circular no. 3/E of the Italian Revenue Agency dated 16 April 2025 set out the operational details. The reform does not change the architecture of rates and exemptions, which have been stable since 2006, but it does overhaul three essential practical aspects of how the tax is computed.

The abolition of the coacervo successorio. Article 8, paragraph 4, of the Testo Unico delle Successioni e Donazioni (D.Lgs. no. 346/1990, hereinafter TUS) is expressly repealed. Under the previous regime, the Italian tax authorities aggregated lifetime gifts with the value of the estate to verify whether the inheritance exemption (1,000,000 euros per child) had been consumed. Italian notarial doctrine had long viewed this aggregation as a survival without legal basis after the 2006 reform; the Italian Supreme Court had already neutralised its scope through its post-2017 case law. The reform settles the matter definitively: the inheritance and the gift exemptions are now watertight. A parent may therefore transmit 1,000,000 euros to each child during his or her lifetime under the gift exemption, and an additional 1,000,000 euros on death under the inheritance exemption, without one operation eroding the other.

The retention of the coacervo donativo, but limited to the exemption. Article 57 TUS, in its post-reform wording, provides that prior gifts from the same donor to the same donee remain aggregated, but solely for the purpose of consuming the exemption. The aggregation no longer plays any role in determining the applicable rate, as confirmed by leading 2025 commentary (Diritto Bancario, Federnotizie). In practice, an Italian parent who gives 600,000 euros to a child in 2026 and then a further 700,000 euros to the same child in 2030 will fully consume the 1,000,000-euro exemption and be taxed at 4 % on the 300,000-euro excess, with no progressive top-up linked to the aggregation.

The move to self-assessment. The 2024 decree generalises the autoliquidazione regime: it is now the heir or donee who computes the tax due and pays it within ninety days of the electronic filing of the declaration. The administration no longer issues an upfront assessment as in the past; control is exercised ex post. This evolution brings the Italian regime closer to the French model of the succession return (form 2705) and the German model of the Schenkungsteuererklärung. It places the burden of legal characterisation on the taxpayer and his or her counsel.

B. Territoriality: worldwide taxation of the Italian donor and inverse symmetry

Article 2 TUS sets out a very wide territorial rule, unchanged by the reform: "Where, at the time of the gift, the donor is resident in Italy, the tax is due on all assets and rights gifted, wherever they are situated." Conversely, where the donor is not resident in Italy, the tax is due only on assets and rights situated in Italian territory. The donee's residence does not, in itself, trigger Italian taxation.

This symmetry was confirmed by the Italian Revenue Agency in its Reply to ruling request no. 7 of 12 January 2024: a gift made by a non-resident donor, to an Italian-resident donee, of cash held on a foreign account falls outside the scope of Italian gift tax. The taxpayer should not, however, rejoice when first transferring his or her residence to Italy: from the moment of registration with the AIRE, deletion from the French consular registers, and registration at the anagrafe of an Italian comune, any gift he or she makes will, in principle, be subject to Italian tax on all transferred assets, whether they sit in Milan, Luxembourg, Dubai or New York.

Application to internationally structured estates. The rule applies strictly to Luxembourg life-insurance policies, which are the favoured estate-planning instrument of wealthy continental European families. A gift of such a policy, whether by way of a change of policyholder (cambio del contraente) or an irrevocable assignment of the benefit to a third party, is treated by Italian doctrine as an indirect gift (donazione indiretta) within the meaning of Article 56-bis TUS or, where the policy is requalified as a financial wrapper under the line of Italian Supreme Court case law on unit-linked policies devoid of any genuine insurance risk (a line opened by Cass. no. 10333/2018), as a direct gift of an underlying securities portfolio. In either case, the Italian donor is taxed on the worldwide value of the contract. The Luxembourg residence of the carrier is irrelevant.

C. Rates, exemptions and form requirements: what the reform did not change

Article 56 TUS continues to set out a simple schedule, among the most favourable in Europe for direct-line transfers. The rate is 4 % above the 1,000,000-euro exemption for gifts to spouses and direct descendants or ascendants (parents-children, grandparents-grandchildren); 6 % above the 100,000-euro exemption for siblings; 6 % with no exemption for relatives up to the fourth degree and in-laws up to the third; and 8 % with no exemption for unrelated parties. For donees with recognised disability, a specific exemption of 1,500,000 euros applies regardless of the relationship. These rates and exemptions were not modified by the 2024 decree; they have been stable since 2006.

On form requirements, Article 782 of the Italian Civil Code requires a notarial deed with two witnesses for direct gifts, a solution restated by the Joint Chambers of the Italian Supreme Court in their judgment no. 18725 of 27 July 2017, extended to bank transfers of significant amounts (donazioni tipiche ad esecuzione indiretta). Informal gifts, parent-to-child wire transfers, forgiven loans, defrayed expenses, fall under the specific regime of the liberalità indirette of Article 56-bis TUS. On this precise point, the Italian Supreme Court (Tax Section, order no. 7442 of 20 March 2024) ruled in favour of the taxpayer against Revenue Circular 30/E of 11 August 2015: such gratuitous benefits attract Italian gift tax only in two scenarios, namely voluntary registration (in which case the ordinary Article 56 rates apply) or disclosure on the occasion of a tax audit (in which case the punitive 8 % rate applies to the amount exceeding the exemption, regardless of the relationship). The historic threshold of 350 million lire, approximately 175,000 euros, which used to trigger the qualification has been abolished by the reform.

II. The Italy-Germany axis: a legal double taxation that can be neutralised by careful gift calibration

A. The German Schenkungsteuer: full taxation of the resident donee

The German law of gifts and inheritance, codified in the Erbschaftsteuer- und Schenkungsteuergesetz (ErbStG), adopts a particularly broad personal nexus. Under § 2(1) no. 1 ErbStG, any gratuitous transfer is subject to unlimited tax liability (unbeschränkte Steuerpflicht) where, at the time of the chargeable event, either the donor or the donee qualifies as an Inländer. The notion of Inländer encompasses natural persons having their domicile or habitual residence in Germany (lit. a), German nationals who have left the territory for less than five consecutive years without retaining a domestic domicile (lit. b, extended unlimited liability) and certain expatriate civil servants (lit. c). The donee's German residence therefore suffices to trigger taxation of the entire transfer, wherever the transferred assets are located.

The Article 16 ErbStG exemptions and the rate classes of Article 19. For parent-to-child transfers in direct line, the personal allowance (persönlicher Freibetrag) is 400,000 euros per donor and per donee (§ 16(1) no. 2 ErbStG), renewable every ten years through § 14 ErbStG, which governs the cumulation (Zusammenrechnung) of gifts from the same donor to the same donee within a rolling ten-year window. The allowance is 500,000 euros for the spouse, 200,000 euros for grandchildren whose intermediate parent is alive, 20,000 euros for siblings and 20,000 euros for unrelated parties. The progressive rates of Steuerklasse I (which covers direct line and spouse) start at 7 % for the taxable acquisition up to 75,000 euros, and reach 30 % above 26,000,000 euros.

A technical trap: the Vollmengenstaffeltarif. Unlike income tax, French as well as German, which applies marginal-rate slicing, § 19(1) ErbStG implements a Vollmengenstaffeltarif: once a bracket is reached, the corresponding rate is levied on the entire taxable acquisition, not merely on the amounts sitting within that bracket. For a parent-to-child gift of 1,500,000 euros, the taxable acquisition of 1,100,000 euros (after deducting the 400,000-euro allowance) falls entirely within the 600,001 – 6,000,000-euro bracket and bears 19 % on the totality, i.e. 209,000 euros. The gap is significant compared with a marginal slicing approach (which would have produced 170,000 euros). The German legislator has softened this rigor through the hardship-relief mechanism (Härteausgleich) of § 19(3) ErbStG: where the taxable acquisition only barely crosses a bracket threshold, the additional tax above the previous bracket is capped at one half, or three quarters for rates exceeding 30 %, of the excess over the threshold. This corrective applies only at the immediate margins of the thresholds; it does not bite where the gift is calibrated well within a bracket.

The notification obligation. The donee has three months from the date of his or her knowledge of the gift to notify the operation to the competent Finanzamt, under § 30 ErbStG. The notarial form does not displace this obligation where the gift concerns real estate, non-listed business assets or, critically here, Auslandsvermögen, that is, foreign-situs assets. Failure to notify engages the donee's tax responsibility and may extend the assessment period to ten years under § 169 of the Abgabenordnung in cases of evasion.

B. The unilateral credit under § 21 ErbStG: scope and limits

Italy and Germany are bound by no bilateral treaty on inheritance and gift tax. The German treaty network on this matter is surprisingly narrow: only the United States, France, Greece, Sweden, Denmark and Switzerland have concluded such a treaty with Germany. The absence of a treaty with Italy leaves, in theory, each State free to tax the same transfer on its own grounds: Italy on the donor (his or her Italian residence), Germany on the donee (his or her German residence), each on worldwide assets. Legal double taxation is therefore the rule, not the exception.

The relief mechanism under German domestic law. The German legislator has provided, in § 21 ErbStG, a unilateral mechanism allowing the donee to credit foreign tax against the German tax. Three cumulative conditions must be met. First condition: the nature of the foreign tax. The foreign tax must be comparable to the German Schenkungsteuer in its nature and chargeable event. The Italian imposta sulle donazioni, which is a gratuitous transfer tax in the classical sense, plainly meets this comparability test. Second condition: identity of the taxpayer. The foreign tax must have been levied on the same operation and have fallen on the same taxpayer as the German tax, namely, here, the donee. Article 5 TUS expressly designates the beneficiary as the soggetto passivo of the imposta sulle donazioni, which satisfies the requirement. Third and most restrictive condition: the qualification as Auslandsvermögen. The credit is limited to the foreign tax that hits assets characterisable as Auslandsvermögen within the meaning of § 21(2) ErbStG.

This last condition has generated the bulk of the case law. Where the donor is not Inländer, which is our hypothesis, the donor being Italian-resident, paragraph 2 no. 2 applies: Auslandsvermögen then encompasses, by exclusion, anything that is not German Inlandsvermögen within the meaning of § 121 of the Bewertungsgesetz (BewG). In other words, anything that is not a German asset in the technical sense of § 121 BewG, German-situs real estate, German business assets, holdings exceeding 10 % in a German company, and the like, qualifies as Auslandsvermögen for credit purposes. Luxembourg life-insurance policies, securities accounts held in Luxembourg or Dubai, bank deposits outside Germany, units of European or American funds all readily meet this definition. The case law of the Bundesfinanzhof illustrates both the operation and the limits of the mechanism: by a judgment of 19 June 2013 (II R 10/12, BStBl II 2013, 746), delivered in relation to French inheritance tax, the BFH refused the credit in respect of bank assets held in France by a deceased resident of Germany, such assets not constituting Auslandsvermögen in the strict sense of § 121 BewG. The lesson is a cautionary one: the credit is confined to assets that qualify as foreign under § 121 BewG, and a mere foreign location is not enough. To our knowledge, no decision has been rendered specifically on Italian gift tax.

The credit cap and its computation. The credit is never total. It is capped at the share of German tax proportionally attributable to the Auslandsvermögen, under the classic formula: credit ? German tax × (Auslandsvermögen / total taxable acquisition). Any excess of Italian tax not credited is neither refunded nor carried forward. The credit further presupposes that the German tax arose within five years of the arising of the foreign tax (§ 21(1), fourth sentence, ErbStG, a substantive condition, not a mere procedural time limit). The application is filed with the competent Finanzamt on production of the Italian assessment, evidence of effective payment, and an asset-by-asset apportionment between Inlandsvermögen and Auslandsvermögen.

C. Gift calibration: the sweet spot at 400,000 euros per parent per decade

The articulation of the two regimes, Italian on the one hand, German on the other, reveals a particularly clear optimisation point. For an Italian parent making a gift to a child resident in Germany: so long as the gift does not exceed 400,000 euros per parent and per rolling ten-year window, it is fully neutral on both sides. On the Italian side, it is absorbed by the 1,000,000-euro exemption. On the German side, it is absorbed by the 400,000-euro allowance of § 16 ErbStG. With two parents, 800,000 euros can therefore be transferred every ten years free of any tax friction, that is, 1,600,000 euros over twenty years, and more if the time horizon is extended.

Beyond that threshold, the edge effect is immediate. The gift overspills the German allowance and falls, for an amount between 400,000 and 1,000,000 euros, within a Steuerklasse I bracket whose rate of 7 % (up to 75,000 euros taxable), 11 % (up to 300,000 euros) or 15 % (up to 600,000 euros) will be applied to the entire taxable acquisition by force of the Vollmengenstaffeltarif noted above. And the § 21 ErbStG credit only relieves Italian tax effectively paid, which will be zero so long as the Italian exemption has not been entered. Numerically, for a gift of 1,500,000 euros per parent to a child resident in Germany, Italy taxes at 4 % on the 500,000-euro excess (Italian tax: 20,000 euros), while Germany taxes at 19 % on the 1,100,000-euro taxable acquisition (German tax: 209,000 euros). The German credit can absorb the Italian tax subject to the Auslandsvermögen qualification, but the net balance of 209,000 euros per parent remains payable in Germany.

For larger estates, the arbitrage between the immediate benefit of a full transfer and decennial spreading will be driven by the donors' age, the foreseeable timeframe before the succession opens, and the liquidity needed by the donees. Our analysis leads us to recommend, in every case where the timetable permits, a decennial fractionation calibrated at 400,000 euros per parent per child. Above that, the marginal German cost becomes quickly prohibitive without any real Italian counterpart, for lack of Italian tax to credit.

III. The Italy-France axis: the 1990 treaty shield and its residual limits

A. The France-Italy convention of 20 December 1990: an underappreciated but protective instrument

France and Italy are, unlike Italy and Germany, bound by a bilateral treaty covering inheritances and gifts. The convention, signed in Rome on 20 December 1990, was published in France by Decree no. 95-351 of 28 March 1995 and entered into force on 1 April 1995. It is, in our view, one of the most protective treaty instruments in the French system of gratuitous transfer taxation, and its effects are surprisingly little known in practice. The French BOFiP refers to it under the identifier BOI-INT-CVB-ITA-20.

The convention organises an allocation by asset category, on lines close to the OECD Model on successions, applicable also to gifts. Article 5 attributes the power to tax real property to the State of situs. Article 6 deals with business assets of a permanent establishment, attributing them to the State of the establishment. Article 7 governs ships and aircraft in international traffic, attributing them to the State of effective management. Article 8 covers securities and debt claims “situated” in a State, securities issued by that State, by a public body or by a company domiciled there, claims against a debtor domiciled there, attributing them to the State of situs. Article 9, finally, is the residual provision of the convention: for “all other property”, which includes tangible movable goods such as works of art, furniture and vehicles, the convention attributes the exclusive taxing right to the State of which the donor is resident. Two points that practice routinely inverts. First, the convention contains no article of its own for tangible movable property. A painting, a piece of furniture, a car falls neither under Article 5 nor under Article 8: it drops into the Article 9 residual and is taxable only in the donor's State of residence, even where it physically sits in France. Second, Article 8 captures securities and debt claims, not tangible property, and its situs test is autonomous: the domicile of the issuer or of the debtor, never the location of the custodian. The credit balance on a deposit account opened with a French bank is a claim against a debtor domiciled in France, hence a French-situs asset under Article 8(2) and taxable in France. The same applies to securities issued by a company domiciled in France. Conversely, Luxembourg securities deposited with a Paris custodian do not become French for that reason alone.

Practical consequence for an Italian-resident donor making a gift to a French-resident child. The gift of a Luxembourg life-insurance policy, of a portfolio of securities issued by non-French companies, of a demand deposit in Dubai or of units in a European or American fund falls under Article 9 and is allocated exclusively to Italy. The reasoning deserves to be spelled out, because the whole shield rests on it. Article 8 allocates a taxing right only where the security or the claim is situated in one of the two contracting States, in the autonomous sense of its paragraph 2. A security issued by a Luxembourg company, a claim against a Luxembourg or Emirati bank, is situated neither in France nor in Italy: Article 8 gives it no connecting factor. It therefore falls into Article 9, whose wording expressly covers property "wherever situated", a formula that would be meaningless if it did not reach assets located in third States. The competing reading would hold that such securities are "covered by" Article 8 by their very nature, that the convention is accordingly silent, and that France recovers its freedom to tax. We do not share it: it would deprive Article 9 of the reach its own text gives it and would leave a very large share of cross-border estates outside any treaty rule, contrary to the object of the convention.

Where Article 9 applies, France must refrain from taxing, even though its domestic law would have applied. Article 750 ter(3°) CGI brings within French tax those gifts received by persons whose fiscal domicile is in France, provided that such domicile has been established in France for at least six years during the ten years preceding that in which they receive the assets. This "six-of-ten" rule would apply to children long settled in France, but the convention prevails under Article 55 of the French Constitution and neutralises the French claim, within the perimeter of Article 9 and no further.

A point practice overlooks: only Article 9 is exclusive. Articles 5, 6, 7 and 8 provide that the assets concerned "are taxable" in the State of situs; Article 9 alone provides that they "shall be taxable only" in the donor's State of residence. That drafting difference is substantive, not stylistic. For assets falling under Articles 5 to 8 the allocation is non-exclusive: the situs State taxes, and the other State keeps its domestic taxing right. It follows, for an Italian donor making a gift to a French-resident child, that France may tax a French building or a French bank deposit both under Article 750 ter(2°) CGI and under the six-of-ten rule of the 3°, without the convention standing in the way. Symmetrically, Italy also taxes those same assets under Article 2 TUS, and it is Italy that owes the credit, since Article 11(1) places the elimination of double taxation on the State of the donor's domicile alone. France, taxing here in its capacity as the donee's State of residence, owes no treaty credit; the taxpayer is left with the unilateral relief of Article 784 A CGI. Finally, Article 11(2) expressly allows the State other than that of the donor's domicile, that is France here, to take into account all property that its domestic law would permit it to tax when computing the tax on the property it is entitled to tax: an effective-rate clause that works against the French donee on the French portion of the gift.

B. The exceptions to the shield: French-situs assets

The treaty shield is not, however, absolute. Several asset categories continue to fall under French taxation. Real property located in France falls within Article 5 of the convention and remains taxable in France. Shares of a French civil company predominantly invested in real estate, that is, companies whose assets consist principally of French-situs buildings, are assimilated to real property by Article 5(3) and remain taxable in France; the domestic connecting factor is confirmed by Article 750 ter(2°) CGI and by the BOFiP (BOI-ENR-DMTG-10-10-30). Units of French SCPI follow the same regime, and the hook is textual rather than doctrinal: an SCPI is a legal person whose assets consist principally of French-situs buildings, which brings it within Article 5(3), and Article 8(2) expressly carves out of the securities category the shares and units covered by that provision. Securities and debt claims situated in France within the meaning of Article 8(2) likewise remain taxable in France: securities issued by a company domiciled in France, credit balances on accounts held with a French institution, claims against a French debtor. This is the point most often missed, because it concerns holdings that families instinctively treat as protected financial assets. Tangible movable property situated in France, by contrast, works of art, furniture, vehicles, falls neither under Article 5 nor under Article 8: it drops into the Article 9 residual and escapes French tax where the donor is resident in Italy.

For all these French-situs assets, taxation is not exclusively French. Italy also taxes, under the worldwide rule of Article 2 TUS, granting the credit provided for in Article 11(1) of the convention. The economic friction is in practice nil, the Italian credit absorbing the 4 %, but the Italian filing obligation remains and must be built into the timetable of the transaction. It is worth adding that the protocol annexed to the convention expressly reserves to France the application of Article 752 CGI, which presumes the donor's ownership of certain securities and claims, a reservation worth bearing in mind whenever French accounts fall within the perimeter of the transfer.

The French filing obligation and its evolution. Even where the convention exempts the gift from any French tax, practice requires the French-resident donee to declare the gratuitous transfer via Form 2735, known as the manual-gift declaration. This filing does not subject the operation to tax, the convention prevails, but it gives certain date to the transfer and starts the fifteen-year counter governing successive cumulations under Articles 784 et seq. CGI. From 1 January 2026, the filing has become compulsorily electronic, under Decree no. 2025-1082 of 17 November 2025. For gifts of foreign assets falling under Article 9 of the convention, we systematically recommend the filing of Form 2735, if only to foreclose any subsequent challenge to the benefit of the convention in the event of the family's return to France.

C. Practical recommendations: anticipate rather than suffer

Map assets by applicable instrument. Any estate-planning exercise involving an Italian-resident parent and German- and French-resident children must begin with an asset-by-asset mapping, crossing each asset's nature (tangible movable, financial, real estate, equity interest), its situs and the applicable treaty or domestic provision. Practice teaches that a majority of the assets held by the families concerned, because they are located in third States, fall under Article 9 of the France-Italy convention and are therefore shielded from any French taxation. A residual fraction nonetheless remains taxable in France, and it is wider than generally assumed: SCPI units and shares of civil companies predominantly invested in French real estate under Article 5, but also shares of companies domiciled in France and credit balances on accounts held with French institutions under Article 8. Since the Article 8 situs test is the domicile of the issuer or of the debtor, and not the place where the securities are held in custody, the mapping must go down to the individual portfolio line and separate, within a single securities account, French from foreign securities and the cash balance from the financial instruments.

Calibrate gifts to the German child chronologically. For the child resident in Germany, the optimal sequence consists in fractionating the transfers in tranches of 400,000 euros per parent, spaced by intervals exceeding ten calendar years, prioritising assets without Italian tax to credit (since § 21 ErbStG presumes an Italian tax effectively paid). Where the wealth to be transferred manifestly exceeds the decennial fractionation capacity, for example, for families whose children expect immediate liquidity, the trade-off between staged transfer and a single partly-taxed transfer must be modelled, factoring in monetary erosion and the opportunity cost of deferral.

Secure Luxembourg life-insurance policies before transmission. Open-architecture Luxembourg life-insurance policies expose the family to a dual risk. First, the Italian requalification as a financial wrapper under the line of Italian Supreme Court case law on unit-linked policies devoid of any genuine insurance risk (a line opened by Cass. no. 10333/2018), which leads to look-through taxation of underlying income rather than deferral until eventual surrender. Second, the German uncertainty as to the policy's qualification for § 21 ErbStG purposes. Before any transmission, we systematically recommend a review of the policy's general conditions, of the investment-policy statement (IPS), and the production of a tax-qualification note validated by a German Steuerberater.

Document the prior wealth situation to activate the Italian optional regimes. Where the parents are freshly settled in Italy, two optional regimes can substantially alter the equation. Article 24-bis TUIR, flat tax of 300,000 euros per annum for new residents who have not been Italian tax-residents in nine of the ten preceding fiscal years (regime applicable for residences acquired from 1 January 2026, by the effect of the 2026 Budget Law), carries with it an exemption from gift and inheritance tax on foreign-situs assets throughout the duration of the option, where the donor itself is the optant. Article 24-ter TUIR, 7 % flat tax on foreign pensions for new residents settling in a Southern Italian comune of fewer than 20,000 inhabitants, does not directly concern gifts, but can fit within a broader asset-allocation strategy.

Prefer the notarial deed beyond the exemption thresholds. For transfers of significant value, typically beyond the 1,000,000-euro per donor/donee pair threshold, legal certainty calls for a formal notarial deed in Italy, registration and immediate payment of the 4 % Italian tax. The correlative risk under Article 56-bis TUS, that is, requalification as a liberalità indiretta on the occasion of a subsequent audit, with application of the 8 % rate on the amount exceeding the exemption, makes the informal approach economically unfavourable above the threshold. The indirect gift remains an option for transfers below the exemption, where the marginal requalification risk is limited.