With Order No. 7161/2026, the Italian Court of Cassation confirmed that the transfer of assets into a trust does not constitute a taxable event for gift tax (“imposta sulle donazioni”).
The proceedings arose from an appeal brought by the Italian Revenue Agency against a second-instance judgment which had excluded that the mere allocation of assets to a trust could trigger gift tax. The Revenue Agency challenged the decision on two separate grounds.
Under the first ground of appeal, the Revenue Agency alleged a violation of Articles 18(2)(e), 24(2) and (4), and 32(2) of Legislative Decree No. 546/1992. According to the tax authorities, the appellate court had improperly examined a new argument that had not been raised in the taxpayer’s original first-instance appeal and had instead been introduced through an untimely and procedurally irregular submission.
In the proceedings before the first-instance tax court, the taxpayer had argued that the transaction qualified for the exemption applicable to generational transfers. According to the taxpayer, the trust had been established to ensure the management and subsequent transfer of controlling shareholdings in two companies to the settlor’s heirs and therefore fell within the scope of the exemption provided by law.
The argument concerning the absence of the taxable event, however, had been raised only at a later stage through a procedurally irregular filing. The Revenue Agency therefore maintained that the existence of the taxable event was not part of the dispute and that the appellate court should have limited its review to the applicability of the exemption under Article 3(4-ter) of Legislative Decree No. 346/1990.
The Court of Cassation rejected this argument. It observed that the prohibition against introducing new claims and objections on appeal, set out in Article 57 of Legislative Decree No. 546/1992, applies only to so-called “proper objections”, namely those based on facts capable of modifying, preventing, or extinguishing the tax claim. These include, for example, objections relating to defects affecting the validity of the assessment, such as lack of competence, formal irregularities, or breaches of procedural rules.
By contrast, the prohibition does not extend to “improper objections” or mere defences, through which the taxpayer challenges the existence of the constituent elements of the tax claim or the tax authorities contest the merits of the taxpayer’s arguments. Consequently, the appellate court was entitled to examine the issue of whether the taxable event had occurred.
The Court of Cassation also dismissed the Revenue Agency’s second ground of appeal, holding that the appellate court had correctly applied the settled case law according to which transfers of assets to a trust are tax-neutral for inheritance and gift tax purposes.
The Court reiterated that assets transferred to a trust are merely earmarked for the benefit of the trust beneficiaries. The initial transfer to the trustee is therefore only formal in nature and serves exclusively to preserve and manage the assets pending their ultimate transfer to the beneficiaries. Only the latter may be regarded as receiving an effective economic benefit through a stable and definitive transfer of wealth. Such enrichment alone constitutes the taxable event relevant for inheritance and gift taxes and is consistent with the constitutional principle of ability to pay enshrined in Article 53 of the Italian Constitution.
In support of its reasoning, the Court also referred to Circular No. 34/E of 2022, in which the Italian Revenue Agency itself acknowledged and endorsed the principles developed by the case law on this issue.
The decision therefore provided the Court of Cassation with a further opportunity to reaffirm its settled position that the transfer of assets into a trust is not, in itself, subject to gift tax. Such transfers are merely instrumental to the subsequent transfer of wealth to the beneficiaries and are functionally linked to the beneficiaries’ future enrichment, which alone constitutes the relevant taxable event.