The Italian Revenue Agency ruled on 16 July 2026 that early trust dissolution resulting in reconveyance of assets to the settlor triggers no gift or inheritance tax, provided beneficiaries receive nothing.
The Italian Revenue Agency confirmed on 17 July 2026 that dissolving a trust and returning assets to the settlor triggers no gift or inheritance tax, provided no beneficiaries receive the property.
Response no. 146 of 16 July 2026 clarifies a long-debated point: the mere setup of a trust doesn’t create a taxable event. Taxation only arrives when beneficiaries actually take possession of assets. If the trust ends before that transfer happens, nothing is taxable.
This aligns with recent administrative guidance (Circular No. 34/2022; Response to Interpellation No. 165/2024) and established case law, particularly Court of Cassation Order No. 31857/2023, which held that early termination of a trust can entirely preclude the taxable event if beneficiaries never achieve enrichment.
Background
The ruling involved a settler who transferred bare ownership of company shares—inherited shares held in Alfa Srl and Beta SpA—into a trust while retaining usufruct. The trust conducted minimal activity, primarily holding the shares and consenting to an extraordinary shareholder meeting that approved Alfa Srl’s merger into Beta SpA.
Following the merger, the trust owned a 36.68% stake in the resulting entity, Beta Srl. Only in 2021 did Beta Srl distribute dividends to the settlers as a usufructuary.
The original designated beneficiary was the settler’s mother, who later renounced her interest. Proposed amendments to add the settlor’s adopted son failed due to legal ineffectiveness under New Zealand law (Trusts Act 2019). With no active beneficiaries and no distributions pending, all parties—settler, trustee, and guardian—agreed to dissolve the trust before its natural expiration and return the 36.68% shareholding to the settlor at no cost.
Legislative framework
Legislative Decree No. 139/2024 recently codified the tax treatment of trusts by inserting Article 4-bis into the Consolidated Law on Inheritance and Donation Tax (Legislative Decree No. 346/1990).
The decree establishes that a taxable event occurs only when the trust results in actual gratuitous enrichment of beneficiaries, with taxation triggered upon asset transfer to them. A destination restriction alone—the settlor’s decision to earmark assets for future beneficiaries—does not constitute an independent taxable event. Instead, a stable and genuinely operative transfer of assets is required.
Income tax treatment
Under the Income Tax Code (TUIR, Articles 9 and 67), capital gains arise only from transactions made for consideration. Since the reconveyance was free and without consideration, no taxable capital gain emerges. The Agency concluded that neither the original contribution to the trust nor the reconveyance upon dissolution produced tax-relevant transfers.
The transaction remains fiscally neutral for both indirect taxes (gift and inheritance tax) and direct taxes (income tax).
