The Italian Tax Agency recently issued a ruling (n. 251 of March 16, 2023) that provides guidance on the Italian tax classification of Family Trusts and Testamentary Trusts and the taxation of Italian beneficiaries on the trusts’ income.


The settlor, an Australian national, established the trusts while he was a resident of Australia. He later moved to Italy, where he passed away. The trusts owned rental real estate and other financial investments located in Australia.

When he was alive, the settlor treated the trusts as fiscally interposed and reported the property and income of the trusts on his Italian personal income tax return. The settlor was also one of the beneficiaries of the trusts and the owner and manager of an Australian company that acted as the trustee of the trusts.

After the settlor’s death, his children were appointed as executors of his will, trustees, and beneficiaries of the trusts. One of the children filed a ruling request with the Tax Agency, asking for clarification on the trusts’ tax classification and the taxation of the trusts’ income.

Tax Classification of the Trusts

The Tax Agency ruled that both trusts should be considered fiscally interposed with respect to the beneficiaries, who had retained the function of trustees of the trusts after the death of the settlor. In that regard, the fact that the petitioner had waived his appointment as executor of the will and had not performed any function with respect to the administration of the trusts was considered irrelevant.

Taxation of Trust Income

The Tax Agency ruled that the real estate income should be computed with reference to the gross rents without any deduction. The Italian beneficiaries would be entitled to deduct a foreign tax credit for a portion of the income taxes paid in the foreign country on that income, in proportion to the amount of income they have declared in Italy.


This ruling provides important guidance on the tax treatment of Family Trusts and Testamentary Trusts in Italy. It clarifies the tax classification of trusts and the taxation of trust income for Italian beneficiaries. This ruling will be of interest to individuals and businesses with cross-border investments and trusts in Italy.