Rome treaty of 20 December 1990 · estates and gifts

France-Italy estates: domicile, location of shares and tax credit

France and Italy have a treaty dedicated to estate and gift tax that allocates the right to tax each asset. Its most unusual rule concerns securities and receivables: they are taxable where the issuing company or the debtor is domiciled, and not only in the deceased's State.

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How is an estate taxed between France and Italy?

The treaty of 20 December 1990, in force for deaths and gifts from 1 April 1995, applies where the deceased or donor was domiciled in France or Italy. The State of domicile taxes under its domestic law, usually on all assets. The other State may also tax real estate located in its territory, assets of a permanent establishment, and securities and receivables located there (Articles 5 to 8).

The State of domicile then deducts from its tax the tax paid in the other State on those assets, capped at the share of its own tax relating to them (Article 11). Other assets, such as furniture, works of art or jewellery, are taxable only in the State of domicile (Article 9).

France-Italy estate and gift tax treaty of 20 December 1990, Articles 1, 5 to 9 and 11, text published on impots.gouv.fr.

— In brief
Text
Treaty of 20 December 1990 and its protocol, in force on 1 April 1995
Taxes covered
French inheritance and gift duties; imposta sulle successioni e donazioni
Method
Credit for tax paid in the other State, capped
Watch point
Securities and receivables taxable in the State of the issuer or debtor
— Asset by asset: who may tax

The allocation rule, article by article

  • Real estate (Article 5). Taxable in the State where it is located, including usufruct and business real estate. As regards France, shares in a company whose assets consist mainly of real estate located in France are treated as real estate, disregarding property used for its own business. Shares in an SCI whose assets consist mainly of French real estate, passed on by a deceased domiciled in Italy, are therefore taxable in France.
  • Business assets (Article 6). Movable assets of a permanent establishment or fixed base are taxable in the State where it is located, except ships and aircraft, and except securities and receivables, which fall under Article 8.
  • Securities and receivables (Article 8). Taxable in the State where they are located. Located in a State are securities issued by that State, its public authorities or a company domiciled there, receivables on a debtor domiciled there, and receivables secured on an asset taxable in that State, up to the value of that asset. This is the clause that sets this treaty apart: where a security is located depends neither on the account, nor on the custodian bank, nor on the place of listing, but on the issuer's domicile.
  • Other assets (Article 9). Anything not covered by Articles 5 to 8 is taxable only in the State of domicile of the deceased or donor.
  • Debts (Article 10). Debts secured on real estate, or incurred to acquire, convert, repair or maintain it, are deducted from that property; those of a permanent establishment or fixed base from that establishment or base; those relating to ships and aircraft, securities and receivables from those assets; others from the Article 9 assets. Each State's law applies where it is more favourable.
  • Tax credit (Article 11). The State of domicile deducts from its tax an amount equal to the tax paid in the other State on the assets that State may tax, capped at the share of its own tax relating to those assets. The other State may take into account all the assets its law would allow it to tax in setting its rate.
  • Mutual agreement procedure (Article 13). Where taxation does not comply with the treaty, the case may be submitted to the competent authority of either State within three years of the first notification of the measure in question.
— The deceased's domicile

Everything starts with domicile, and the protocol adds an exception

A person is domiciled in a State where their estate is taxed there by reason of domicile, residence or a similar criterion. If domiciled in both, they are attached, in order, to their permanent home, centre of vital interests, habitual abode, then nationality (Article 4).

For estates, but not for gifts, the protocol adds a rule specific to this treaty. A person who, at death, was regarded as domiciled in both States, held the nationality of one without that of the other, clearly intended to keep their domicile in the State of nationality, and was domiciled in the other State for less than five years in total during the seven years before death, is deemed domiciled only in the State of nationality. An Italian who has lived in France for four years may thus fall under Italy alone, provided that intention can be shown.

The treaty applies only if the deceased was domiciled in France or Italy. If they lived in a third State, it does not apply: subject to any other applicable treaty, an heir domiciled in France on the date of transfer may then be taxed in France on the assets received under Article 750 ter, 3° of the French tax code, if they have been tax-domiciled in France for at least six of the ten years preceding the year of transfer.

— Before the courts

One decision on proof of domicile

Between France and Italy, estate disputes concern proof of domicile. Pensions and residence for income tax fall under the 1989 treaty, which has its own decisions.

  • The donor's domicile has to be proved, at the date of the taxable event. A donee who argues that the donor was domiciled in Italy, to escape French duties, must establish it at the date the gift was disclosed, the taxable event. The purchase of a villa, later statements and an Italian estate return do not suffice against French property income returns and bank accounts bearing a Swiss address; the successive tests of paragraph 2 of Article 4 apply only if the donor is domiciled in both States (CA Grenoble, 1st civil ch., 15 April 2025, no. 23/03947).
— What to understand

The treaty shares the right to tax, it does not remove it

Both States often tax the same estate: the State of domicile under its law, usually on all assets, the other on what is located in its territory. The treaty removes neither; it requires the State of domicile to deduct the tax paid elsewhere, and only for the assets the treaty allows the other State to tax.

This treaty departs from the usual pattern on one decisive point. Shares, bonds and receivables are taxable in the State where the issuing company or debtor is domiciled. A portfolio of shares in companies domiciled in Italy, held by a deceased domiciled in France, may therefore be taxed in Italy, then in France with a capped credit, even if it is held with a French bank. The likely duties in each country, and the credit, are best prepared before death, not after.

— Who is concerned

Five common situations

Italian families settled in France

Deceased domiciled in France, family assets still in Italy: house, land, company shares.

Italian residents owning property in France

A Paris flat, a villa on the Riviera, sometimes held through a French SCI.

Securities portfolios

Italian or French shares and bonds held across the border.

Lifetime gifts

The treaty also covers gifts: lifetime transfers follow the same allocation rules.

Heirs in several countries

Children living in France, Italy or elsewhere: the heir's domicile can bring French law into play.

— Frequently asked questions

What we are asked about France-Italy estates

My father, domiciled in France, leaves a house in Tuscany: who taxes it?

Italy may tax the house, located in its territory (Article 5). France, as State of domicile, taxes the estate including the house, and deducts the Italian tax paid on the house, capped at the share of French tax relating to it (Article 11).

A deceased domiciled in Italy held listed shares in French companies: can France tax them?

Yes. Article 8 makes securities issued by a company domiciled in France taxable in France, wherever they are held or listed; if the company's assets are mainly French real estate, Article 5 applies instead, with the same result. Italy, as State of domicile, also taxes under its law and deducts the French tax paid, capped at the share of its own tax relating to those shares.

Is a French SCI held by an Italian resident real estate for the treaty?

Yes, as regards France, where the company's assets consist mainly of real estate located in France (Article 5, paragraph 3). Its shares are taxable in France as the property itself would be.

Does the treaty apply to gifts?

Yes, to gifts made by a person domiciled in France or Italy at the time of the gift, with the same allocation and credit rules as for estates. Only the protocol rule on temporary domicile is specific to estates.

What about income tax between France and Italy?

It is governed by the treaty of 5 October 1989, covered on our page on the France-Italy tax treaty.

Do you work with Italian notaries?

Yes. The firm handles the French tax side and the application of the treaty, and coordinates with the family's Italian notary or adviser so that both estate returns are consistent.

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A transfer between France and Italy to organise?

Confidential first conversation. The firm handles the French side and the application of the treaty, working with the Italian notary.

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© BENSAID Avocats. The information on this site does not constitute legal advice. Source: France-Italy estate and gift tax treaty of 20 December 1990 and its protocol, published on impots.gouv.fr.