The house follows its own law
Robert and Linda’s farmhouse
Robert and Linda live in Indianapolis. They have three grown children, and in 2022 they bought a restored farmhouse outside Montalcino, where they now spend two months every year. The deed is in Robert’s name. They have no plans to move to Italy, and Robert’s will, drawn up by a lawyer in Indiana, leaves everything to Linda. Robert’s habitual residence is in Indiana. Under Article 21 of the EU Succession Regulation (No. 650/2012), which Italian courts and notaries apply to anyone who died on or after 17 August 2015, his succession is therefore governed by the law of Indiana. One would expect that to settle the matter. It does not, and the reason is Article 34. When the Regulation points to the law of a country outside the EU, it takes that law as a whole, including its rules of private international law, whenever those rules send the question back to the law of a Member State. Lawyers call this renvoi, and it matters here because American law, like English law, does not treat an estate as a single block. Movable property follows the law of the deceased’s domicile; land follows the law of the place where it lies. Ask Indiana law who inherits a farmhouse in Tuscany, and it replies that this is for Italy to decide.
An Italian notary dealing with the farmhouse will therefore start from Indiana law, follow it back to Italy and apply Italian succession law to the house. The same chain works for a Londoner with a flat in Rome: English law governs the estate, English conflict rules hand immovable property over to the law of the place, and the flat ends up under Italian rules. For Robert the effect is concrete. Italian law reserves part of every estate to the closest family, the legittima. With a wife and three children, half of the estate is reserved to the children together and a quarter to the spouse, and Robert is free to leave only the remaining quarter as he wishes. When renvoi splits a succession in this way, the Italian Supreme Court, sitting in full session in 2021, held that each part is treated as a separate estate, with its own heirs, its own shares and its own protection for reserved heirs. That judgment was given under the Italian rules in force before the Regulation, but the prevailing view is that its reasoning still holds. The children’s shares are therefore measured on the farmhouse alone, whatever Robert owns in Indiana.
What happens to Linda and the children
Robert’s will is not void. Linda inherits the house, but for ten years from the day she accepts the inheritance any of the children can go to court to have her share reduced until theirs is made up. If they do, Linda keeps half of the house and the three children share the other half. No amount of careful Indiana drafting prevents this unless the will deals with the point expressly. It can, as we will see.
Owning it together does not mean inheriting it
Many American and British couples assume that buying the house together takes care of all this: when one of them dies, the other simply keeps it. At home that is exactly what a joint tenancy with right of survivorship does, in the United States and in England alike.
Italy has nothing of the kind. Two people who buy a property together hold it in comproprietà, co-ownership in fixed shares, usually half each. When one of them dies, that half does not pass to the other automatically. It falls into the estate and goes wherever the will or the intestacy rules send it, subject to reserved shares if Italian law applies. Had Robert and Linda bought the farmhouse together, Linda would own her half outright and Robert’s half would go through his succession. The children’s reserved shares would then be calculated on that half: a smaller problem, but the same one. Putting the house in one spouse’s name does not avoid the question either; the whole house then goes through that spouse’s estate, as Robert’s does. For most couples married and living in the United States or the United Kingdom the matrimonial property regime will not be Italian, and the name on the deed is what counts. Where the marriage is governed by Italian community of property, the notary will treat the house as belonging to both spouses whatever the deed says. The nearest thing Italy offers to survivorship is a different arrangement altogether, which we come to below.
When the paperwork from home does not work
The Italian succession process
The second surprise comes when someone actually dies. The machinery of a common-law estate, with a personal representative, letters testamentary and a grant of probate, has no real counterpart in Italy. Italian law does know an executor, the esecutore testamentario, but the role is a narrow one. Nobody gathers the estate in and then hands it out: the heirs acquire the assets directly, from the moment of death, once they accept. Letters appointing Linda as Robert’s personal representative in Indiana will not, on their own, persuade an Italian notary or the land registry to let her sell the farmhouse or register it in her name.
What Italy needs instead is the will itself. A foreign will has to be deposited with an Italian notary, together with a sworn translation, before anyone can rely on it for Italian property; a handwritten will is also formally published by the notary. The heirs then need Italian tax codes, must file the succession return and have their acceptance and the transfer recorded in the property registers. The European Certificate of Succession, which an Italian notary can issue, is designed for use in other EU countries; for a house that sits only in Italy, the heirs prove their entitlement with Italian documents, apostilled certificates from home and, where the notary asks for it, a statement of the relevant foreign law.
Why accepting an inheritance requires caution
Acceptance deserves a word of caution, because it is where foreign heirs most often stumble. Where Italian law governs the house, as it does for Robert if his will is silent, an heir who accepts without the benefit of inventory becomes personally liable for the deceased’s debts, without limit. The rule has a sharper edge than most people realise. An heir who is in possession of estate property when the owner dies has three months to draw up an inventory, failing which he or she is treated as having accepted outright (Article 485 of the Civil Code). Linda, who holds a set of keys and uses the house every summer, may well be in that position. Collecting rent or signing a contract for the property can also count as acceptance. Heirs who live abroad, and who do not know the full picture of the deceased’s affairs, should take advice before doing anything at all.
The tax bill: lower than you fear, but unavoidable
Italian inheritance tax
Italian inheritance tax reaches Italian real estate whoever the owner is and wherever he or she lives. For someone who was not resident in Italy, only assets situated in Italy are taxed, and a house is the obvious case. The rates are modest: 4% for a spouse and children on what each receives above EUR 1 million, 6% for brothers and sisters above EUR 100,000, 6% for other relatives up to the fourth degree and 8% for everyone else. In law, the taxable base is the market value of what passes. In practice, for a registered building, heirs declare the cadastral value, because the tax office cannot challenge a declared value that is at least equal to it. The cadastral value is the property’s cadastral income, increased by 5% and multiplied by 120 for a residential property, or by 110 where the heir qualifies for first-home relief. For a Tuscan farmhouse bought for EUR 2 million, it may be a small fraction of the price. Agricultural land or vineyards that come with the house are valued on their own cadastral income, whereas building land is taxed at market value, and a restoration never reported to the land registry is better regularised by the owner than discovered by the heirs. On the farmhouse passing to Linda and the three children, each with a EUR 1 million allowance, there would in practice be no inheritance tax at all.
Mortgage and cadastral taxes
What is always payable are the mortgage and cadastral taxes, 2% and 1% of the cadastral value with a minimum of EUR 200 each, due when the property is registered in the heirs’ names. If an heir meets the Italian first-home conditions, which include moving his or her residence to the municipality within eighteen months, both drop to a flat EUR 200. For a foreign heir that is rarely realistic. The succession return must be filed within twelve months of death, normally online, although heirs living abroad may send a paper return by registered post when online filing is impracticable. For deaths on or after 1 January 2025 the heirs calculate and pay the tax themselves, under Legislative Decree No. 139/2024. When the deceased never lived in Italy, the return goes to a designated office of the Revenue Agency in Rome.
Double taxation
Double taxation is manageable. Italy has estate tax treaties with the United States (1955) and the United Kingdom (1966), and both countries also give a unilateral credit for death taxes paid abroad on foreign real estate. Italian tax on the farmhouse would generally be credited against US federal estate tax, although with an exemption of USD 15 million per person from 2026, most American owners will have no federal liability to set it against.
What actually works
Choosing the law of nationality
The most effective step is also the cheapest. Article 34(2) of the Regulation switches renvoi off when the deceased has chosen, under Article 22, the law of the country of his or her nationality. If Robert’s will contains an express choice of law, the Italian notary applies the internal rules of the chosen law to the farmhouse: there is no referral back to Italy, no reserved share for the children, and Linda inherits as the will says. The wording needs care. The United States has no single law of succession, and Article 36 of the Regulation reads a choice of the law of nationality as a choice of the law of the state with which the person has the closest connection. Robert’s clause should therefore say exactly what it means: the law of his nationality, namely the law of the State of Indiana. Linda’s will needs the same clause, and a British owner would choose the law of England and Wales. The fate of the house depends on this provision, and it should be drafted by lawyers who know both systems.
The risks of a separate Italian will
The popular advice to make a separate Italian will for the Italian property also needs some qualification. It can make sense, since an Italian handwritten will, written out entirely by hand, dated and signed, is simple and costs little. But it hides two traps. The first is revocation: a later will can revoke an earlier one, so an Indiana will that “revokes all prior wills”, signed after the Italian one, can wipe it out, and the reverse can happen too. The second is scope. A choice of law under Article 22 applies to the succession as a whole and cannot be confined to the Italian house, so a choice written into an “Italian” will reaches everything the testator owns and has to fit the rest of the plan.
Usufruct and bare ownership
Three structural routes are also proposed from time to time, and each has a price. The first splits ownership in two. The parents buy the usufrutto, the right to use the property for life, and the children buy the nuda proprietà, the bare ownership. When the parents die, the usufruct simply ends and the children become full owners, with no succession and no inheritance tax. If the parents take the usufruct jointly, with a clause that the survivor’s right extends to the whole, Linda keeps the use of the house for life after Robert’s death; the Italian Supreme Court has confirmed that a joint usufruct of this kind ends only when the last usufructuary dies, and that until then the children’s bare ownership cannot become full ownership. This is the closest Italy comes to survivorship. But it cannot be undone, and where Italian law governs the succession, money the parents give the children to buy their share counts as a gift when reserved shares are calculated. American parents should also know that the same money is a gift for US tax purposes, and that the US rules on retained life interests may bring the house back into their taxable estate.
Holding the property through a company
The second is a company. Holding the house through a company turns an immovable into shares, and shares are movables, which follow the law of the owner’s domicile rather than the law of the place. That changes the conflict analysis, at a high price: the Italian rules on non-operating companies, no first-home treatment, higher running costs and, if the company is Italian or its main business is in Italy, shares that remain subject to Italian inheritance tax. The choice-of-law clause gets there without any of this.
Using a trust
The third is a trust. A foreign trust can hold Italian property, which then does not pass through the settlor’s estate. Italian gift and inheritance tax still applies to the Italian asset: since 2025 it is normally charged when the property reaches the beneficiaries, unless the settlor or the trustee chooses to pay it when the trust is funded. Whether the reserved heirs can challenge the transfer into trust depends on the law that governs the succession, which brings us back to the choice-of-law clause.
Before you sign the deed
All of this is best settled before the deed is signed. A buyer should first ask an adviser at home which law their courts apply to real estate abroad: if the answer is the law of the place, as it is in every American state and in England, the working assumption is that Italian law will reach the house. The will should then contain an express choice of the law of nationality that meets the requirements of Article 22, repeated consistently in every will the owner holds, at home and in Italy. How title is taken, in one name, jointly or split between usufruct and bare ownership, deserves the same attention as the tax on the purchase, and couples should know their matrimonial property regime before the notary asks. The heirs, finally, should know what awaits them: no executor in the common-law sense and no probate, a will to be deposited with an Italian notary, a return due within twelve months and nothing that could count as acceptance before they have taken advice. A copy of the deed and of the cadastral extract, kept where they can find them, will save them weeks.
The asset that stays behind
For most American and British owners, the house in Italy is the one asset that never moves. Bank accounts, portfolios, even a family business follow the owner’s law wherever he or she lives. The house stays under Italian rules unless the owner decides otherwise, and there is only one place where that decision counts: the will. A buyer who deals with it at the outset needs a single, well-drafted paragraph. One who does not leaves the question to the heirs, who will pay for the answer in time and money, and sometimes in family peace.
