The road is open as of October 1 for tax-free parental concessions of real estate, cash, shares, bonds and stakes in corporations, through a regulation submitted in Parliament.
The new clause provides for first-degree relatives to transfer between them in the form of a donation or concession any asset up to 800,000 euros without paying any tax. Any such transaction above that level will incur a 10% tax only for the section of the asset’s value that is in excess of €800,000.
The tax break offered is considerable, as up until September 30 such concessions that topped €150,000 were liable to a growing rate of tax: After the tax-free threshold of €150,000 and up to €300,000, the tax due amounted to 1% of the conceded asset’s taxable value. The next bracket was €300,000-€600,000, in which the tax rate amounted to 5%. All concessions in excess of €600,000 incurred a 10% tax, while as of today there is no tax up to €800,000.
In practice, that threshold is much higher, as it applies to each parent or grandparent and to each child; that means two parents may concede an asset worth €1.6 million to a child without paying any tax, and if the same child’s grandparents wish so they can concede assets worth another €800,000 each, for a total of €3.2 million.
Notably, the measure also covers the transfer of companies in the form of parental concessions, thereby helping family companies to be passed on from one generation to the next. The measure further concerns donations or concessions between spouses or signatories of a civil partnership.
For example, a husband who on September 30 passed on to his wife a property asset worth €750,000 would have to pay €31,500 in tax, while if he does so from October 1 he will have to pay zero tax. Similarly, a mother passing on a €900,000 company to her daughter on September 30 would need to pay €46,500, while on October 1 she will only have to pay €10,000.
Notably, there is no change to the tax regime on inheritance.