The five‑year rule for gratuitous transfers: application of the anti‑avoidance provision in the case of an interposed foreign trust

by Maria Alessia Grillotti

Abstract

In Ruling No. 17 of 23 January 2026, the Italian Revenue Agency addressed the application of the anti‑avoidance provision set out in Article 16(, par. 1 of Law No. 383/2001 to the transfer within a five year period of shares in an Italian limited liability company (S.r.l.) received by a beneficiary following a distribution made by a Swiss trust. Having classified the trust as fiscally interposed with respect to the settlor, the tax authorities held that, where the beneficiary disposes of the shares before five years have elapsed since the distribution, the resulting capital gain must be taxed in Italy as though the settlor had made the transfer directly.

The case

The matter concerns an Italian citizen, resident for tax purposes in Switzerland, who holds 60% of the share capital of an Italian limited liability company (S.r.l.), whose principal asset consists of real estate located in Italy. The remaining 40% is held by the taxpayer’s sister, resident in Italy.

Originally, the entire shareholding was owned by the taxpayer’s mother who, in 2020, as part of a declared estate‑planning strategy, transferred the bare ownership of the shares – together with the voting rights attached to 100% of the participation – to a discretionary and irrevocable trust governed by Swiss law. The beneficiaries of the trust were the mother’s two children and their descendants.

Deeming the trust structure no longer efficient, the trust was dissolved in 2022, and the bare ownership of the shares was allocated 60% to the taxpayer and 40% to his sister. Concurrently, the taxpayer undertook to maintain control of the company for at least five years, invoking the preferential tax regime for generational transfers set out in Article 3, par. 4‑ter, of Legislative Decree No. 346/1990. In 2024, following the mother’s death, full ownership of the shares was consolidated in the taxpayer and his sister through the merger of usufruct and bare ownership.

In view of a potential sale of the (bare ownership of the) shares, the taxpayer submitted five questions to the Italian Revenue Agency, seeking clarification on the following points:

  1. whether the transfer of the bare ownership of the S.r.l. shares falls within the scope of the anti avoidance rule in Article 16, par. 1, of Law No. 383/2001;
  2. whether the trust may be regarded as “interposed” with respect to the taxpayer;
  3. the relevant starting date for the computation of the five year holding period (namely, whether it should run from the 2020 contribution to the trust or from the 2022 distribution);
  4. whether the anti avoidance provision may be disapplied due to the absence of an abusive intent;
  5. should the provision apply, whether the trust may be considered the relevant “transferor”.

The position of the Revenue Agency

At the core of the matter lies Article 16, par. 1, of Law No. 383/2001, which the Revenue Agency briefly analyses. The provision, clearly anti avoidance in nature, operates as a fictio iuris, imposing the substitute tax on capital gains under Article 5 of Legislative Decree No. 461/1997 on the recipient of the donation, where a subsequent transfer occurs within five years from the original gift. As a result, the beneficiary is taxed as if the gratuitous transfer had never taken place, with the capital gain computed by reference to the historical cost attributable to the donor. 

The first, and indeed central, clarification offered in the ruling concerns the scope of Article 16. Rejecting the taxpayer’s submissions, the Agency situates the provision firmly within the framework of Legislative Decree No. 461/1997 and within the category of “other income” under Article 67 of Presidential Decree No. 917 of 22 December 1986 (“ITA”). The Agency further relies on Article 9, par. 5, ITA to extend the rules governing transfers for consideration to transactions involving the transfer of rights of use or enjoyment. On this basis, the Agency concludes that the transfer of the bare ownership of shares in an S.r.l. unequivocally falls within the scope of the anti‑avoidance rule.

As to the second question, the Agency develops a two step reasoning: on the one hand, it denies that the trust was interposed with respect to the taxpayer, noting the absence of any evidence that the taxpayer exercised de facto control over the management of the trust; on the other hand, it interprets the control and veto powers vested in the taxpayer in his capacity as protector as instruments through which the mother – the settlor – was able to retain an indirect influence over the assets contributed to the trust. On this basis, the Agency concludes that the trust was fiscally interposed with respect to the settlor.

As a consequence, since the contribution of the shares to the trust did not result in any effective dispossession by the settlor, the Agency holds that the relevant transfer, for the purposes of the anti avoidance rule, took place only in 2022, at the moment the shares were distributed from the trust (in substance, from the mother) to the beneficiaries.

The Agency further rejects the possibility of disapplying Article 16 of Law No. 383/2001, considering that the structure implemented (namely, the interposition of the Swiss trust, the contribution of the bare ownership of shares in an Italian company, and the subsequent donation‑tax‑exempt distribution of those shares) falls squarely within the situations the provision is designed to address.

Finally, the fifth query is rendered moot by the conclusions already reached. Since the trust is treated as fiscally interposed, it cannot be regarded as the “transferor” for the purposes of Article 16. The relevant donor is therefore the mother, who was resident in Italy. Accordingly, the capital gain is subject to taxation in Italy even though it is – formally – realised by a non‑resident entity (the trust).