INHERITANCE TAX - A COMPARATIVE ANALYSIS BETWEEN ITALY AND FRANCE

Abstract

The following thesis aims to analyze the inheritance tax of two countries, Italy and France, that are very close to each in terms of territory, culture, and legislation, but profoundly different in terms of the taxes on inheritance. Despite coming from similar histories, the inheritance tax of these two countries has taken different directions in terms of applicable rates and allowances. Appears to be important to deal with this topic because it seems more and more that Italy intends in the not-too-distant future to impose higher inheritance tax. However, before getting to the description of the inheritance taxes applied in the above-mentioned States, the paper introduces the concept of inheritance. Chapter one explains the concept of succession in general with reference to the Italian structure and legislation. The most important aspects and characteristics of the Italian succession are treated here, i.e., what is the succession, what are the sources of the succession namely the law and the will of the deceased, the agreements as to future successions which are prohibited by the Italian law, the provisions regarding the family pact, the type of succession i.e., universal and particular, and the procedures to be followed for the succession, which are the opening of the succession, the presentation of the declaration of succession, which can also be the European certificate of succession in case the succession is characterized by international profiles. For what concerns the international profile, chapter one also presents the EU Regulation no. 650/2012 which aims at identifying the connecting criteria (general and special) to be applied in order to identify the law that is applicable to the entire succession of a subject . The Regulation anyways, as we will see, applies only to matters relating to succession mortis causa, with the expressed exclusion of taxation, customs and administrative matters.Chapter two is about the inheritance tax in Italy. Following a brief historical introduction regarding the birth and development of the tax, the characteristics of the tax are explained in detail. The presentation of the declaration of succession, the following calculation of the tax due and the payment are also included in this chapter. As it will be seen, Italian rates and allowances are much lower than those in France, even if the legislation and the procedures around inheritance and inheritance taxes are analogous. Chapter 3 is composed approximately like the first two chapters, but in this case, reference is made to French legislation. Thus, after an initial introduction of how succession works in France where a description of the different cases that may arise is made, the focus shifts to French inheritance tax. An historical background is first given before going into the specifics of the tax. As will be discussed in the chapter, inheritance tax is one of the highest in Europe and represents a very important slice of the country's GDP. The last chapter deals with the problem of international double taxation which can occur in case of presence of successions with international profiles, for instance the case of a subject resident in a State but which has properties located in another State. The chapter presents the notion of international double taxation and also presents the identified solutions in order to mitigate or eliminate the double taxation. One of the different solutions is the adoption of a Convention between States. In this regard the “Convention between the government of the Italian republic and the government of the French republic for the avoidance of double taxation with respect to taxes on inheritance and gifts and for the prevention of fiscal evasion and fraud” is exposed and then a case object of a Tax Ruling by the Italian Revenue Agency is analyzed in order to show the concrete application of the EU Regulation 650/2012 together with the Convention afore mentioned.