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Patto di famiglia: passing the business to children, payments and tax

Patto di famiglia: exemption for a business passed to children with a five-year undertaking, payments to siblings taxed as a parental gift (Res. 12/E/2025).

With a patto di famiglia (family business pact), an entrepreneur transfers the business or shareholdings to one or more children during his or her lifetime and, in the same deed, the recipient pays off the other legittimari (heirs entitled to a reserved share): what has been received cannot be called into question when the succession opens. The transfer of the business is exempt from gift tax if the child continues the business, or retains control, for five years. Sums paid to siblings are taxed as a gift from the parent, with an allowance of one million euro for each child.

The framework

Civil Code. Article 768-bis defines the pact as the contract by which an entrepreneur transfers, in whole or in part, the business, or a shareholder transfers his or her shareholdings, to one or more descendants, in compliance with the rules on the family business (impresa familiare, Article 230-bis c.c.). Article 768-ter requires a notarial deed (atto pubblico), failing which the pact is void. Under Article 768-quater, the spouse and all those who would be legittimari if the succession opened at that moment must take part; the assignee pays them a sum equal to their reserved share (Articles 536 et seq.), which may also be settled in kind, unless they waive it in whole or in part. What is received is not subject to collation (collazione, bringing into hotchpot) or to reduction. Actions to set the pact aside for defects of consent are time-barred after one year (Article 768-quinquies); anyone who becomes a legittimario after the pact may claim, when the succession opens, the sum due to them, with statutory interest (Article 768-sexies).

Gift tax. Article 3, paragraph 4-ter, of Legislative Decree 346/1990 (TUS, the Consolidated Inheritance and Gift Tax Act), as replaced by Legislative Decree 139/2024 for deeds from 1 January 2025, exempts from tax transfers of businesses, company interests (quote) and shares to descendants and the spouse, including by means of a patto di famiglia. For corporations, it applies only to shareholdings that confer or supplement de jure control (Article 2359, paragraph 1, no. 1, c.c.). The recipient must continue the business, hold control or keep ownership of the interests for at least five years, and must declare this in the pact itself. If the undertaking is not honoured, ordinary tax is payable, with the penalty under Article 13 of Legislative Decree 471/1997 and default interest. The rates are set out in Article 56 TUS: 4% for the spouse and direct line on the amount exceeding 1,000,000 euro per beneficiary; 6% for brothers and sisters above 100,000 euro. From 1 January 2027, the gift tax rules move into the Consolidated Act on Indirect Taxes (Legislative Decree 123/2025), whose application was deferred to that date by Decree-Law 200/2025.

Equalisation payments to the legittimari. In Resolution no. 12/E of 14 February 2025, the Agenzia delle entrate (the Italian Revenue Agency) adopted the position of the Corte di Cassazione (Supreme Court) (judgment of 24 December 2020 no. 29506, orders of 17 June 2022 no. 19561 and 16 July 2024 no. 19627): for tax purposes, the payment is a gift from the settlor to the legittimario (Article 58, paragraph 1, TUS), with the rate and allowance applicable to their relationship. The resolution clarified Circulars no. 3/E of 2008 and no. 18/E of 2013 accordingly; the opposite interpretation, which taxed the equalisation payment as a gift between siblings, was that of Cass. order of 19 December 2018 no. 32823, superseded by judgment no. 29506/2020. The exemption does not cover equalisation payments.

Income taxes. The gratuitous transfer of the business does not give rise to capital gains, and the child carries over the parent’s tax values (Article 58, paragraph 1, TUIR, the Consolidated Income Tax Act); for shareholdings not held as business assets, the donor’s cost applies (Article 68, paragraph 6, TUIR).

What changes in practice

A widowed father owns a family business in which his son A works; his daughter B works elsewhere. The business is worth 1,800,000 euro according to the valuation. With two children, the aggregate reserved share is two thirds, one third each (Article 537 c.c.): A must therefore pay B 600,000 euro, calculated, according to the prevailing view, on the value of the business transferred.

• Business to A: exempt, if A continues the business for five years and declares this in the deed.
• 600,000 euro to B: a father–daughter gift, below the 1,000,000 allowance, no tax. Under the previous interpretation, as a gift between siblings, the tax would have been (600,000 − 100,000) × 6% = 30,000 euro.
• Had the father already given B 500,000 euro in cash by a registered deed, the remaining allowance would be 500,000 (Article 57 TUS; for assets other than cash, the current value of what was given counts): tax (600,000 − 500,000) × 4% = 4,000 euro.

For income tax purposes, A receives the business at his father’s tax values: the capital gain will arise if and when he sells it. Administrative practice has not clarified whether the 600,000 euro paid to B increases the tax cost of the business; it is advisable to plan on the basis that it does not.

Practical steps

• Before the deed: a valuation report on the business or the shareholdings at the date of the pact, a list of the gifts already made by the parent to each child, and the position of the family members participating in the impresa familiare (rights to profits and increases in value, pre-emption right over the business).
• At the notary’s, by notarial deed: the settlor, the assignees, the spouse and all the legittimari. In the same deed, the five-year declaration of undertaking, the amounts and timing of the equalisation payments, any withdrawal clause and, if the parent retains the usufruct of the shares, the agreement giving the child the vote at the ordinary shareholders’ meeting (Article 2352 c.c.), including the vote on the allocation of profits.
• If the business is transferred and there are employees, the employer changes: the employment relationships continue with the child, who is jointly and severally liable with the parent for the workers’ claims accrued up to the transfer, including the TFR (statutory severance pay) accrued up to that date (Article 2112 c.c.). With more than 15 employees, at least 25 days before the deed, or before any binding agreement preceding it, parent and child must notify in writing the company-level union representatives and the sector unions of the date, the reasons, the legal, economic and social consequences for the workers and any measures planned in their regard. Within seven days of receipt, the unions may request in writing a joint consultation, which must begin within a further seven days (Article 47, paragraphs 1 and 2, of Law no. 428 of 29 December 1990). After the deed, the payroll consultant (consulente del lavoro) updates the mandatory employment notifications and the INPS (social security) and INAIL (workplace accident insurance) positions in the name of the new owner.
• If shareholdings in a company are transferred, the employer remains the company and these obligations towards employees do not apply. The shareholders’ INPS positions remain, however: if the child joins an snc (general partnership), becomes a general partner in an sas (limited partnership) or joins a commercial or artisan srl (limited liability company) and works there on a habitual and predominant basis, the child must be enrolled in the INPS traders’ scheme (Article 1, paragraph 203, of Law no. 662 of 23 December 1996) or, if the business is an artisan business, in the artisans’ scheme; the parent who stops working there leaves it.
• Even without employees, if an artisan or commercial sole proprietorship is transferred, the owner changes: with the filing with the Business Register, the position of the child, who must be enrolled as owner in the INPS artisans’ or traders’ scheme, and that of the parent are updated; the parent leaves the scheme or, if the parent continues to work in the business on a habitual and predominant basis, may be enrolled as a collaborating family member.
• Equalisation payments made by traceable means, on the dates set in the deed.
• For five years from the date of the pact: every sale, contribution, demerger or cessation must be checked before it is decided.
• To be kept until the assessment periods expire: the deed, the valuation, evidence of payments and of earlier gifts.

Mistakes to avoid

• Settling the equalisation payments through private agreements between siblings, outside the notarial deed: the pact is valid only as a notarial deed (Article 768-ter c.c.), and whatever remains outside it enjoys neither the protection from collation and reduction (Article 768-quater, last paragraph, c.c.) nor taxation as a gift from the parent with the 1,000,000 euro allowance. If it comes to light or is registered, the sum risks being treated as a gift between siblings, at 6% above 100,000 euro.
• Overlooking a legittimario, starting with the spouse.
• Omitting the declaration of undertaking or making it after the deed.
• Transferring bare ownership of the shares while leaving the parent the vote, or even just the vote on profits.
• Calculating the tax on equalisation payments at the 6% rate between siblings, or without taking into account the parent’s earlier gifts.
• Selling or reorganising within the five years in such a way that the assignee child no longer continues the business or loses control, even in favour of a sibling.

References

Articles 230-bis, 536, 537, 768-bis to 768-sexies, 2112, 2352 and 2359 c.c.

Law no. 428 of 29 December 1990, Article 47, paragraphs 1 and 2

Law no. 662 of 23 December 1996, Article 1, paragraph 203

Legislative Decree no. 346 of 31 October 1990, Articles 3, paragraph 4-ter, 56, 57 and 58, paragraph 1

Legislative Decree no. 139 of 18 September 2024, Articles 1 and 9

Presidential Decree no. 917 of 22 December 1986, Articles 58, paragraph 1, and 68, paragraph 6

Legislative Decree no. 471 of 18 December 1997, Article 13

Legislative Decree no. 123 of 1 August 2025

Decree-Law no. 200 of 31 December 2025, converted into law by Law 26/2026

Agenzia delle entrate, Resolution no. 12/E of 14 February 2025, Circulars no. 3/E of 22 January 2008 and no. 18/E of 29 May 2013

Cass. order of 19 December 2018 no. 32823, Cass. 24 December 2020 no. 29506, order of 17 June 2022 no. 19561, order of 16 July 2024 no. 19627