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Three countries, one estate: who taxes what when a German pensioner dies owning an Italian apartment and a Swiss bank account
How is an Italian apartment taxed in a German pensioner's estate?
That is the question families ask after the funeral, once the notary's letter arrives from Verona and the German tax office writes from Munich. The answer involves three different codes and, if no one plans ahead, three overlapping tax demands on the same assets.
Italy's 2026 dual-threshold reform — which extended the one-million-euro exemption per heir and separately calculated each prior gift from 1 January 2026 under Legislative Decree 139/2024 and its implementing decree, Legislative Decree 123/2025 — has created a temporary asymmetry. A gift timed to use Italian headroom may simultaneously trigger German Schenkungsteuer (gift tax) or a Swiss cantonal gift levy at a much higher effective rate. Coordinated timing across all three countries is no longer optional; it is work that should begin now / cannot wait.
Yes — and only the Italian property. Under Article 2 of Legislative Decree 346/1990, the Testo Unico delle disposizioni concernenti l'imposta sulle successioni e donazioni (the consolidated succession and gift tax code, known as TUSD), Italian inheritance tax applies to Italian-sited assets where the deceased was not resident in Italy at the date of death. The apartment in Verona is within scope. The Swiss bank account is not, because for a non-resident deceased, foreign-sited assets are outside the Italian charge entirely.
Rates on Italian-sited assets run from 4% (direct line descendants, with a €1,000,000 per-heir exemption) to 8% (unrelated beneficiaries, no exemption). A German pensioner's children each receive a €1,000,000 deduction from the Italian taxable base before the 4% rate applies. On a Verona apartment worth €400,000, shared between two children, the Italian inheritance tax is nil — the exemption covers / absorbs the entire value. On a €1,600,000 Italian property split between two children, each €800,000 share still falls below the threshold and again the Italian charge is zero. But for a single heir, or for distant relatives, the calculation changes significantly / the numbers look very different.
The key practical question under TUSD Article 2(3) is the situs of intangible assets. Shares in an Italian company are Italian-sited and therefore in scope; shares in a German or Swiss company held by a non-resident deceased are not. Bank accounts follow the location of the branch. This matters because families sometimes assume that a Swiss account belonging to a German resident who happens to own an Italian flat will trigger Italian tax on everything. It does not.
Yes. Italy and Germany concluded a bilateral convention on inheritances in 1989 (the Convention between the Italian Republic and the Federal Republic of Germany for the Avoidance of Double Taxation on Inheritances and Gifts, ratified in Italy by Law No. 85 of 1992). Under that treaty, where the deceased was resident in Germany, Italy retains the right to tax Italian-sited immovable property, but Germany grants a credit for the Italian tax paid against the German liability on the same asset. The mechanism prevents the Italian apartment from being taxed in full in both countries simultaneously.
Germany taxes the worldwide estate of a German-resident deceased under § 2 of the Erbschaftsteuer- und Schenkungsteuergesetz (the German Inheritance and Gift Tax Act, ErbStG). The Italian apartment therefore enters the German taxable base at its full value. The Italian tax already paid on it is then credited against the German liability under the 1989 Convention. In practice, if the Italian rate is lower than the German rate — which it usually is, given Germany's rates reach 30% for direct descendants on amounts above €26,000,000 — the heirs pay the Italian tax first and pay the difference up to the German liability.
Unlike in most common-law jurisdictions, where estate duty is levied once at the estate level before distribution, Italy and Germany each impose their tax on the individual heir's share. This means the credit calculation must be done heir by heir, not estate by estate. A family where the apartment passes to three children in unequal shares needs three separate credit calculations, one per beneficiary.
Switzerland has no federal inheritance tax. The federal levy was abolished in 1990. What Switzerland has is twenty-six cantonal regimes, each setting its own rates, thresholds, and beneficiary categories entirely independently. A child inheriting in the canton of Schwyz pays zero cantonal inheritance tax; the same child inheriting in Geneva may face a modest charge; an unrelated beneficiary in almost any canton faces substantial rates.
The critical point for families with an Italian apartment and a Swiss account is that there is no bilateral inheritance tax treaty between Italy and Switzerland. None. Switzerland is not a party to the 1989 Italy-Germany convention, and no separate Italy-Switzerland convention on inheritances exists. The Swiss canton of the deceased's domicile will tax the worldwide estate — including the Italian apartment — under cantonal rules, and Italy will separately tax the Italian apartment under TUSD. The Italian tax credit mechanism that Germany's treaty provides does not exist here. Whether Switzerland provides a unilateral credit for Italian tax paid depends entirely on cantonal law, which varies.
This is the gap that families most often discover too late.
On the same asset, ordinarily not — the 1989 Convention prevents it for the Italy-Germany pair. But Italy-Switzerland has no such protection. A German-resident pensioner who happened to hold Swiss cantonal domicile through a secondary residence, or whose heirs are domiciled in Switzerland, can face genuine double taxation on the Italian apartment: Italy charges under TUSD, and the relevant Swiss canton charges under its own succession law with no treaty credit on the other side.
Revenue Agency Ruling No. 16 of 11 February 2026 (Risposta n. 16/2026, Agenzia delle Entrate) sharpened this risk. The Ruling concerned an Italian corporate shareholding passing on death to a Swiss municipality. The Agency denied the inheritance tax exemption that the estate's advisers had sought, confirming that the reciprocity condition required for treaty-based exemptions is construed strictly: informal arrangements and bilateral administrative practice are not sufficient. Only a formal, verifiable treaty mechanism qualifies. For families relying on assumed exemptions between Italy and Switzerland — particularly on shares in Italian companies, where the situs question under TUSD Article 2(3) already requires careful analysis — this Ruling is a direct warning.
Semel malus semper praesumitur esse malus — 'once found deficient, always presumed deficient' — may overstate the position, but the Revenue Agency's approach to reciprocity claims comes close to it in practice. The burden of proving that a foreign jurisdiction grants equivalent relief falls on the estate, not on the tax authority.
The German-resident pensioner's situation thus produces three distinct tax conversations: Italy on the apartment, Germany on the worldwide estate minus the Italian credit, and the relevant Swiss canton on its own basis with no Italian credit to claim. The Swiss account, if held at a Swiss branch in the name of the German-resident deceased, is outside Italy's charge but fully within Germany's worldwide sweep — subject again to the 1989 credit.
As the Roman jurist Gaius observed, every people governed by laws is partly governed by its own, partly by rules common to all — a distinction that modern cross-border succession renders painfully practical.
Italy: tax on Italian-sited assets only for non-resident deceased; rates 4%–8%; €1,000,000 per-heir exemption for direct descendants; no gift coacervo from 1 January 2026.
Germany: worldwide estate taxed; ErbStG § 2 captures everything; rates up to 30% for direct descendants at high values; Italian tax credited under the 1989 Convention.
Switzerland: no federal inheritance tax; twenty-six cantonal regimes; no treaty with Italy; cantonal domicile of the deceased determines which canton charges and at what rate; unilateral credits vary by canton and are not guaranteed.
The asymmetry created by Italy's 2026 reforms is this: the abolition of the gift aggregation mechanism (coacervo successorio) from 1 January 2026 means that large Italian-situs gifts made in prior years no longer reduce the €1,000,000 exemption available at death. For a family with a Verona apartment worth €800,000 and prior Italian gifts of €400,000, the Italian death charge is now nil where previously it would have been positive. But those same prior gifts may have already triggered German Schenkungsteuer — and Germany's ten-year lookback rule for gifts means recent transfers remain in the German taxable base regardless of what Italy does. The Italian improvement is real; it just does not travel.
In our files the most common mistake in estates of this type is treating the Italian and German tax positions as sequential rather than simultaneous. Families instruct an Italian notary to deal with the Italian property, then separately instruct a German tax adviser weeks later. By that point, the Italian tax return has been filed without the information the German adviser needs to calculate the credit correctly, or the German return has been filed first and the credit claim becomes procedurally difficult. The Italian inheritance tax return must be filed within twelve months of the date of death under TUSD Article 31. The German return has a three-month deadline from knowledge of the taxable event under ErbStG § 31. The two deadlines run concurrently. Both advisers need the full picture from day one.
If a death has just occurred or is anticipated, the immediate priorities are: obtain a certified copy of the Italian land registry search (visura catastale) for the Italian property to confirm ownership, the cadastral value, and any encumbrances; obtain the Swiss account statement as at the date of death; identify which Swiss canton the deceased was domiciled in, because that determines whether a cantonal inheritance tax charge arises at all; and instruct Italian and German counsel simultaneously, not sequentially, so the credit calculations and the two filing deadlines can be co-ordinated from the start. The Italian certified email system (PEC, a legally recognised form of registered email in Italy) is the required channel for many filings with the Revenue Agency, and setting up that channel takes time a family in mourning rarely anticipates.
Does the Italy-Germany inheritance tax treaty cover assets in Switzerland?
No. The 1989 Convention applies between Italy and Germany. Switzerland is not a party to it. Italian-sited assets in a German-resident's estate benefit from the treaty credit when Germany taxes the worldwide estate, but a Swiss-resident heir or a Swiss-domiciled element of the estate receives no equivalent protection. Italy and Switzerland have no bilateral inheritance tax convention.
If the Italian apartment is below the one-million-euro exemption, is there still a German tax liability on it?
Yes, potentially. Germany taxes the worldwide estate of a German-resident deceased, and the Italian apartment enters the German taxable base at full value. Germany then credits the Italian tax paid, but if no Italian tax was due — because the Italian exemption eliminated the charge — there is nothing to credit. The German liability on that asset still applies at German rates, and the credit is zero.
Which Swiss canton is relevant when a German pensioner also had a Swiss bank account?
For a German-resident deceased, the relevant Swiss canton is generally the canton where the deceased held a secondary or fiscal domicile in Switzerland, if any. If the deceased had no Swiss domicile, the Swiss account is not subject to Swiss inheritance tax: Switzerland's cantonal inheritance taxes are linked to domicile, not to the location of assets. The Swiss bank will, however, require evidence of the heirs' entitlement before releasing the funds, and in some cantons that evidence must be provided in a specific form.
HREFLANG BLOCK:
Editorial Team — Panato Law Firm Staff
