D.Lgs. 139/2024 reform, France-Italy 1990 convention and § 21 ErbStG: structuring family wealth transfers from Italy in 2026
Italy has, over the past few years, regained a strong attractiveness as a destination for well-off European taxpayers, a 200,000-euro flat tax for new residents (raised to 300,000 euros by the 2026 Budget Law for residences acquired from 1 January 2026), a 7 % flat tax on foreign pensions for retirees who settle in certain Southern Italian municipalities, and a stable tax climate following the structural reform of gift and inheritance taxation that came into force on 1 January 2025. This renewed appeal carries a difficulty of its own for internationally dispersed families: when the children of new Italian residents live in other European countries, each contemplated gift collides simultaneously with several gift-tax systems whose coordination is not always secured by a bilateral treaty.
The textbook fact pattern is that of a couple, Italian tax-resident, who wish to make gifts to two children, one residing in Germany, the other in France, out of an estate consisting essentially of foreign-held movable assets (Luxembourg life-insurance policies, securities accounts and bank deposits, fund units, and possibly French real-estate-collective-investment (SCPI) units or shares of a French civil-real-estate company). The problem is twofold. On the German axis, Italy and Germany are bound by no bilateral treaty on inheritance and gift tax, yet both States tax the same transfer, Italy at the donor level, Germany at the donee level, on the entirety of their worldwide assets. On the French axis, the France-Italy convention of 20 December 1990 attributes to Italy an exclusive taxing right over substantially all movable assets, but reserves to France its own situs assets (real estate, SCPI units, shares of a French civil company predominantly invested in real estate), which calls for an asset-by-asset analysis.
This article offers a critical reading of the combined framework. We first examine the renewed Italian gift-tax regime and the consequences of the abolition of the so-called coacervo successorio (I); we then analyse the Italy-Germany double-taxation exposure through the lens of the unilateral relief mechanism of § 21 ErbStG and set out the optimal calibration of the gift (II); we finally study the treaty protection offered by the France-Italy 1990 instrument, its limits for French-situs assets, and the practical structuring recommendations (III).
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 dedicated internal funds (fondi interni dedicati, FID), 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 (notably BFH, 19 June 2013, II R 10/12) has confirmed the application of this grid to transfers subject to Spanish inheritance tax, in terms that translate without difficulty to Italian gift tax. To our knowledge, no decision has been rendered specifically on Italian gift tax, but the reasoning is identical.
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 application must be filed with the competent Finanzamt within five years of the establishment of the foreign tax, 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 Paris 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 tangible movable property, physical goods as opposed to intangible rights, attributing them to the State of situs. Article 9, finally, is the residual provision of the convention: for "all other property", that is, by subtraction, all financial assets, bank accounts, life-insurance contracts, receivables, financial instruments, non-real-estate equity interests, the convention attributes the exclusive taxing right to the State of which the donor is resident.
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 securities portfolio held with a Luxembourg bank, of a demand deposit in Dubai, of units of a European or American fund, is attributed exclusively to Italy under Article 9 of the convention. France must refrain from taxing the transfer, even though its domestic law, Article 750 ter of the French Tax Code (CGI), would have applied. Indeed, Article 750 ter(3°) CGI attributes to French taxation 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 established in France, but the 1990 convention prevails under Article 55 of the French Constitution and neutralises the French claim.
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 by derogation. 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, within the meaning of companies more than 50 % of whose value is derived from French real estate, are also rattached to Article 5 and remain taxable in France; this qualification is confirmed by Article 750 ter(1° bis) CGI and by the BOFiP (ENR-DMTG-10-10-30). Units of French SCPI are the subject of doctrinal debate: the most defensible analysis, which we adopt, consists in treating them as real-estate assets by virtue of the fiscal transparency of the vehicle and applying Article 5 of the convention. Tangible movable goods situated in France, works of art, furniture, vehicles, fall under Article 8 of the convention and remain taxable in France.
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 assets held by affected families fall under Article 9 of the France-Italy convention, and are therefore shielded from any French taxation, but that a residual fraction (SCPI, SCI, sometimes Euronext-Paris-listed shares to the extent they qualify as French situs under domestic law) remains taxable in France. This mapping is the foundation of all subsequent strategy.
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 dedicated internal funds (notably as reaffirmed in the post-2018 line), 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.
Conclusion
The structuring of cross-border gifts from Italy to children resident in Germany and France illustrates, in all its complexity, the current fragmentation of European tax law on gratuitous transfers. On the Italy-Germany axis, the persistent absence of a bilateral treaty imposes a rigorous calibration strategy, dominated by the combination of the 1,000,000-euro Italian exemption, the decennially renewable 400,000-euro German allowance, and the unilateral relief mechanism of § 21 ErbStG, whose effectiveness depends on the qualification of the assets as Auslandsvermögen. On the Italy-France axis, the 1990 convention, underappreciated but remarkably protective, neutralises the French claim for substantially all movable assets, subject to French-situs assets which remain taxable in France.
Our reading of practice leads us to two convictions. First, Italy now offers, post-D.Lgs. 139/2024, a particularly competitive estate-planning framework for transmission in direct line, 4 % above 1,000,000 euros per parent per child, with no coacervo successorio and simplified self-assessment, which deserves to be fully exploited by European families in the process of settling south of the Alps. Second, coordination with the donees' German and French regimes must be subject to chronological planning prior to any significant operation; improvised arbitrages are paid for in irreversible cost overruns, particularly on the German side where the cliff effect of the Vollmengenstaffeltarif is unforgiving.
Our recommendation is clear: every family in the course of settling in Italy and contemplating transmissions to children settled elsewhere in Europe should commission, before the first operation, a cross-jurisdictional audit covering the three, or four, if Luxembourg is involved through a life-insurance policy, affected jurisdictions. The framework consultation, drafted in English and designed for rapid review by an Italian tax counsel and a German Steuerberater, is the piloting tool that allows the family to avoid subsequent friction and to quantify, up front, the global cost of each scenario.
Frequently asked questions
What is the exemption applicable to gifts from Italian-resident parents to children in direct line?
Article 56 of the Testo Unico delle Successioni e Donazioni (D.Lgs. 346/1990) provides for an exemption of 1,000,000 euros per child and per donor for direct-line gifts, against which a single 4 % rate applies on the fraction exceeding the threshold. With two parents, each child can therefore receive 2,000,000 euros over a lifetime free of any Italian tax. Since the D.Lgs. 139/2024 reform, the gift exemption no longer consumes the equivalent inheritance exemption: a parent can therefore transmit 1,000,000 euros to each child during life and, in addition, 1,000,000 euros on death, fully free of Italian tax.
Is there a bilateral tax treaty between Italy and Germany on gifts?
No. Italy and Germany are bound by no bilateral treaty covering gratuitous transfer taxes. Germany has concluded such treaties only with the United States, France, Greece, Sweden, Denmark and Switzerland. In the absence of a treaty, each State applies its domestic law: Italy taxes the resident donor on worldwide assets; Germany taxes the resident donee on the entirety of the transfer. Double taxation is therefore structural. It can only be mitigated through the unilateral credit mechanism of § 21 ErbStG, which covers only assets qualified as Auslandsvermögen and caps the credit at the proportional share of the corresponding German tax.
Is the gift of a Luxembourg life-insurance policy by an Italian resident taxable in Italy?
Yes, as soon as the donor is Italian tax-resident at the date of the chargeable event, Article 2 TUS subjects the gift to Italian gift tax on the worldwide value of the policy, irrespective of its Luxembourg origin. Depending on the modality of transfer, change of policyholder (cambio del contraente), change of beneficiary, or partial surrender followed by a cash gift, the Italian qualification may be that of a direct gift (requiring a notarial deed) or of an indirect gift within the meaning of Article 56-bis TUS (a more flexible regime but exposed to the 8 % requalification risk in case of audit). The risk of requalification of the policy itself as a financial wrapper, under the line of 2024 Italian Supreme Court case law, must be anticipated for open-architecture policies with individualised investment mandates.
How can double taxation between Italy and Germany be avoided on a gift exceeding the allowances?
Total elimination of double taxation is never guaranteed in the absence of a bilateral treaty. The unilateral credit mechanism of § 21 ErbStG allows the German-resident donee to credit Italian tax effectively paid against the corresponding German tax, provided the assets transferred qualify as Auslandsvermögen within the meaning of paragraph 2, which, in practice, covers all assets held outside Germany by a non-German-resident donor. The application must be filed with the competent Finanzamt within five years, on production of the Italian notice and proof of payment. The credit is capped at the share of German tax proportionally attributable to the Auslandsvermögen. To neutralise friction entirely, the most effective solution remains chronological calibration: capping each tranche at 400,000 euros per parent and per rolling ten-year window, which keeps the operation under both allowances and leaves no tax to credit.
Does the France-Italy convention of 1990 shield gifts of foreign assets to a French-resident child?
Yes, and this is one of the major estate-planning attractions of Italian residence for families with children settled in France. Article 9 of the convention attributes to the State of residence of the donor, Italy, an exclusive taxing right over assets other than real property, business assets of a permanent establishment, ships and aircraft in international traffic and tangible movable property. Luxembourg life-insurance policies, securities accounts, bank deposits and substantially all financial assets fall within Article 9. France must therefore refrain from taxing, even though its domestic law, and in particular the six-of-ten rule of Article 750 ter(3°) CGI, would have justified the levy. The filing in France of Form 2735, now subject to mandatory electronic filing from 2026, remains nonetheless recommended to confer certain date on the transfer and preserve the donee's position in case of subsequent return to France.