In today’s economic environment, there is an ever-increasing trend towards entrepreneurial activity and, more generally, towards the exploitation of assets through corporate vehicles. At the same time, judicial disputes and family conflicts among heirs are a frequent phenomenon in cases where the owner of the estate dies intestate, where the provisions of the will are void or unclear, or where mandatory provisions of law are infringed (e.g. infringement of the forced share). Such situations can be avoided through timely succession planning during one’s lifetime, by means of an inter vivos transfer of the full or the bare ownership of shares or corporate interests. An alternative but equally useful tool is offered by the inheritance contracts newly introduced by Law 5303/2026.
I. Bare ownership and usufruct
Usufruct is the right in rem under which the holder (usufructuary) has the power of full use and enjoyment of the fruits of an asset belonging to another. The owner of the asset, to whom ownership remains stripped (bare) of the powers of use and enjoyment, is called the bare owner. Unless otherwise agreed, usufruct is by law non-transferable and is extinguished upon the death of the usufructuary, whereupon the bare owner automatically acquires full ownership, without any acceptance of the inheritance or any other act being required. Usufruct may be established over immovable or movable property, such as shares or partnership interests. In the latter case, the transaction is concluded by private document and the usufructuary retains, as a rule, the voting and dividend rights.
This mechanism allows for effective planning of the succession of the owner of the estate while he/she is still alive. More specifically, the shareholder or partner may, subject to any restrictions imposed by the articles of association, transfer to a person by parental gift or donation the bare ownership of his/her shares or partnership interests and retain the usufruct for life. In this way, the transferring shareholder/partner continues to exercise the rights deriving from the participation in the company, while the acquirer holds the bare ownership with limited powers until the death of the usufructuary, whereupon the two are consolidated and the bare ownership is converted into full ownership without the need for any further formality. Other assets, such as real estate, may be transferred in a corresponding manner, in which case the usufructuary retains the right of use and of lease.
II. Benefits
A. Tax benefits
The transfer of bare ownership by parental gift or donation inter vivos is governed by the provisions of the Property Tax Code (Law 5219/2025). As a rule, the taxation of the bare owner is deferred until the consolidation of the usufruct with the bare ownership, at which point the tax is calculated on the value of the full ownership at that time. However, the bare owner has the option to request the immediate taxation of the bare ownership, in which case the tax is calculated only on the value of the bare ownership, that is, on the value of the full ownership reduced by the value of the usufruct. The value of the usufruct is determined as a percentage of the value of the full ownership, depending on the age of the usufructuary. In particular, the percentage starts at 8/10 (80%) of the value of the full ownership for a usufructuary up to 20 years of age and decreases by one tenth per decade, reaching 3/10 (30%) if the usufructuary is over 60 years of age, 2/10 (20%) if he/she is over 70 and 1/10 (10%) if he/she is over 80. For example, in a transfer by a parent aged 62, the usufruct will be valued at 30% of the value of the full ownership. Consequently, the immediate taxation of the bare ownership upon its transfer will be calculated, after deducting the 30% corresponding to the usufruct, on 70% of the value of the full ownership. In that case, upon the death of the usufructuary, no further tax liability arises, nor is the submission of a tax return required.
The option of immediate taxation is particularly advantageous because the taxable value:
1) is “locked in” at the value of the share or partnership interest at the time of the transfer, irrespective of any subsequent increase thereof and
2) is reduced by the value of the usufruct.
In addition, the same law provides for a tax-free threshold of EUR 800,000 for parental gifts and donations to relatives of the transferor, namely the spouse or the partner in a civil partnership, the children, the grandchildren and the parents. The tax-free amount is autonomous and applies independently for each provider and each beneficiary (that is, EUR 800,000 from the father to the child, EUR 800,000 from the mother to the same child, EUR 800,000 from the father to the second child, and so on). The tax-free amount does not apply solely to a single transfer, since each parental gift or donation between the same persons exhausts part of the threshold, while the remainder stays available for the following ones. Once the threshold has been exhausted, any excess value is taxed at a tax rate of 10%.
It should be noted, however, that the tax authorities have ruled that transfers involving the interposition of intermediate persons with a view to circumventing the EUR 800,000 threshold may be regarded as an artificial arrangement and be taxed accordingly, with the simultaneous imposition of a fine. One such example is that of “triangular transactions” such as the case where the mother, having exhausted the tax-free threshold through transfers to her child, transfers the asset to the father so that the latter may subsequently transfer it to their child, enjoying the tax-free amount corresponding to him (see Circular E. 2077/20-10-2022 para. 5.13 and Decision of the Dispute Resolution Directorate no. 1005/2024). If the exclusive purpose of the transfer is not the incorporation of the asset into the estate of the acquirer but its further transfer to the real recipient of the donation in order to avoid taxation, the scheme will be characterised as an artificial arrangement.
By contrast, the tax-free threshold of EUR 800,000 does not apply to succession upon death. The inheritance tax is calculated on the basis of a special scale, under which the aforementioned relatives (spouse, partner in a civil partnership, children, grandchildren, parents) enjoy a tax-free amount of EUR 150,000. A tax rate of 1% applies to the part of the value from EUR 150,000 to EUR 300,000, a tax rate of 5% to the part from EUR 300,000 to EUR 600,000 and a tax rate of 10% to the excess. In light of the above, the tax benefit of an inter vivos transfer is evident in the case of high-value assets or of multiple successive transfers.
B. Succession benefits
By following the above solution, both the will of the provider and the interests of the successors are secured.
More specifically, the provider plans the distribution of his/her shares or partnership interests in the manner best suited to the continuation of the business, without any future action being required. Furthermore, through the inter vivos transfer, legal issues that might arise in the future and lead to judicial disputes (such as a possible infringement of the forced share) can be avoided.
Correspondingly, in favour of the successors, unforeseen changes to the often agreed distribution of the estate are limited. In particular, risks such as a possible challenge to a holographic will, its unilateral revocation or amendment, as well as a possible transfer of the testator’s assets to a third party before death, are avoided.
III. Alternative tool: Inheritance contracts
Through the recently established institution of inheritance contracts, the owner of the estate is given, for the first time, the possibility to regulate jointly with the counterparty the fate of his estate after death, in a binding manner. At the same time, this agreement may be combined with the waiver by the counterparty, with or without consideration, of any claims they would have on the estate, thereby ensuring that the succession cannot be challenged.
In essence, these contracts provide benefits similar to those of the inter vivos transfer, as they ensure timely planning and the avoidance of risks associated with the drawing up of a will. They differ, however, in three basic respects:
1) The tax-free threshold of EUR 800,000 is not available; instead, the special tax scale referred to above applies, since the effects of the contract, and therefore the transfer of the assets, occur upon the death of the deceased and the acceptance of the inheritance by the heir;
2) The owner of the estate retains full ownership of the objects of the contract until death and has, in principle, the right to transfer them, unless otherwise agreed or unless the transfer was made gratuitously with the intention of harming the counterparty;
3) In contrast to the parental gift, which in principle is not revocable, the law grants the possibility to revoke the provision of the inheritance contract in favour of a person, in the event that the latter commits an offence that would justify the disinheritance. By contrast, a donation may, under certain conditions, be revoked on grounds of ingratitude.
IV. Conclusion
The inter vivos transfer to relatives, and in particular the transfer of the bare ownership of shares, partnership interests or other assets with retention of the usufruct, constitutes a flexible and effective tool for succession planning. The owner of the estate retains for life the use, the income and the control of the business, and ensures the distribution of the estate in accordance with his/her will without the need for any further action. At the same time, because of the favorable tax framework, the relevant cost is significantly reduced. The inheritance contracts of Law 5303/2026 now offer an alternative or complementary solution, in particular where the owner wishes to retain full ownership until death. Given that the most appropriate solution depends on the composition and value of the estate, on family relations and on the objectives of the owner, succession planning requires a timely and tailored legal and tax assessment of each case.