US Trust and Beneficiaries in Italy: Taxation by Transparency

Interpello Answer No. 239/2025 examines the case of a US Trust, initially an interposing entity (Grantor Trust), which becomes irrevocable and enters liquidation following the Settlor's death. Where beneficiaries are fiscally resident in Italy, the Agency excludes the interposing nature, acknowledging the Trustee's managerial autonomy.

Nevertheless, the Trust is qualified as "transparent" for Italian tax purposes – despite its opaque status in the US – because the beneficiaries' predetermined right to receive the residual assets renders them "identified" (Art. 73, para. 2, TUIR). This results in the pro-rata imputation of income to resident beneficiaries.

The case reinforces the crucial distinction: transparency pertains to income (IRPEF), whereas capital is subject to Inheritance/Donation Tax (ex Art. 4-bis TUS) only upon final distribution, provided that the territoriality requirements are met.

A critical issue arises from the Agency's use of the term "residual assets" (fondo residuo) to define the right that triggers transparency: this wording risks confusing the right to income with the actual ownership of the capital, even though Circular 34/E/2022 mandates a clear separation between the tax regimes.

This interpretative gap raises questions about the actual "actuality" of the right, particularly when the Trustee retains discretion to defer distributions. The case confirms the imperative for meticulous international tax planning and professional advice that verifies both income and inheritance tax implications.

Our office remains available for any clarification.