Skip to main content
Log in

Avoiding taxes by transfers within the family

  • Published:
International Tax and Public Finance Aims and scope Submit manuscript


We document an episode with considerable tax avoidance that occurred in Italy after 2008 when the Italian government reformed the property taxation by abolishing taxation on principal residences and increasing taxation on secondary properties. In the presence of a very low inter vivos gift tax, Italian families found it beneficial to redistribute properties among their members. Difference-in-difference estimates indicate that property tax reform increased the probability that high-wealth donors made an inter vivos property gift relative to less wealthy donors. This in turn affected the donees’ income capacity and consumption, increasing inequalities. We show that family ties give room for households’ strategic behavior to avoid taxes; hence, it is relevant to take them into consideration when designing effective fiscal policies.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others


  1. Published 4 July 2015.

  2. In his New York Times article published 21 January 2012.

  3. In a similar situation, Nordblom and Ohlsson (2006) show that the marginal excess burden of inheritance taxes might be infinite as the inheritance tax might be avoided by giving inter vivos.

  4. Stiglitz (1985) distinguishes between three different ways of avoiding taxes: redistribution of income to the types of income that are taxed the least, redistribution of income to the family members that are taxed the least and the maximum use of tax credits. Our example is of the second type.

  5. The tax systems perspective means to consider a variety of costs and behavioral margins often ignored in standard tax analysis: administrative and compliance costs, evasion and avoidance behavior, and multiple non-rate tax system instruments (Slemrod and Gillitzer 2013).

  6. A family might consist of several households.

  7. In the case of Italy, the difference is between owner occupied residence and other properties, in the UK the council tax differs drastically if nobody resides in the house, the typical case of second properties; in Ontario, there are 7 different rates for 7 different types of properties (Slack and Bird 2014).

  8. Tax rates were set by municipal governments within the range of 0.4–0.7%.

  9. Taxation on the principal residence was reintroduced, but only for luxury dwellings (Messina and Savegnago 2014).

  10. Keen et al. (2012) calculated an average increase of 49%.

  11. The basic tax rate was set at 0.76%, but municipalities were permitted to alter the rate within ± 0.3%. The tax rate for principal residences was set at 0.4%, but municipalities were allowed to alter the rate within ± 0.2%.

  12. The small tax amounts from principal residences between 2008 and 2011 came from taxation of very valuable residences such as villas, castles or monumental dwellings in Rome.

  13. The information is provided by one of the authors. The other authors thank their coauthor for disclosing the information.

  14. The tax rate for the first dwelling in 2007 is 0.46% and for the second is 0.7%. The value for the second dwelling remains unchanged, for the rest of the years in Table 2. The value for the first dwelling goes to 0 because of the cut, remains 0.46% unaltered for first properties as luxury villas or castles.

  15. Fifty-eight is computed as follows, 108 euros coming from a principal residence of around 60 square meters nearby the shore, assuming same assessed value of the donor’s principal residence with a deduction of 50 euros for the child.

  16. A novelty for the Italian tax system since in principal free loan for use are contracts that transfer the property just in nominal but not in real terms.

  17. The questionnaire asks about the educational qualification, employment status and sector of activity when the parent was the same age as the respondent.

  18. While Jappelli et al. (2014) only include individuals who have at least one parent alive in their sample, we differ from them by including all households.

  19. This choice is induced by the fact that not all the waves in SHIW report parental occupation for the household head partner. In principle, this would lead to a downward bias estimation of our causal effect, based on homogamy.

  20. Jappelli et al. (2014) found a differential around 0.08 on the sample 1993–2006.

  21. Jappelli et al. (2014) provide an interesting appendix, on the validity of such identification strategy. Their findings are that a difference-in-difference strategy, as the one we exploit, can at least conduce to attenuation bias in the estimation of the average treatment effect, see their appendix for a detailed proof of the effect of miss-classification on the estimated effects.

  22. We include a control for year of birth of the donor, of birth of the household head, and the gender of the household head. We further control for the level of schooling of the household head (an indicator if the head does not have college degree or more), an indicator if the household head has siblings and city size dummies. Low education of the recipients is correlated with a decrease in probability of receiving a transfer and fewer square meters transferred, not surprisingly being an only child is positively correlated with the probability of receiving a transfer. We further include a set of dummies for city size in order to control for the fact that rural urban differential characteristics could bias the results.

  23. The data and information used for this computation are easily available from many sources among which the website of the Osservatorio delle politiche territoriali u.i.l.,

  24. The authors define “switchers” as those individuals who become treated in the second date \(T=1\). In this empirical framework, we will have switchers both in the treatment and in the control group, though in smaller proportion.

  25. In the SHIW survey, individuals are asked the hypothetical rental value of their house.

  26. Results for non-imputed rents are nonsignificant: this is coherent with the hypothesis that recipients of the donation did not own a property prior to the transfer. If this were the case, while the donors would indeed avoid taxes, the tax burden would be transferred to the recipient, who would have no incentive to receive the house.

  27. The probability that the house of property comes from a donation is 0.056 in our analytical sample.

  28. More specifically, the incidence of poverty slightly decreased between 2008 and 2009 (from 11.3 to 10.8%) and then increased to 11 and 11.1% in the next two years. The intensity of poverty followed a similar trend, moving from 21.5 to 20.8% in the first two years, and then to 20.7 and 21.1% (ISTAT data).


  • Alesina, A., & Giuliano, P. (2014). Chapter 4—family ties. In P. Aghion & S. N. Durlauf (Eds.), Handbook of economic growth, volume 2 of handbook of economic growth (pp. 177–215). Amsterdam: Elsevier.

    Google Scholar 

  • Boserup, S. H., Kopczuk, W., & Kreiner, C. T. (2016). The role of bequests in shaping wealth inequality: Evidence from Danish wealth records. American Economic Review, 106(5), 656–661.

    Article  Google Scholar 

  • Cannari, L., & D’Alessio, G. (2008). Intergenerational transfers in Italy. Bank of Italy Research Paper A9, Banca d’Italia, Rome.

  • de Chaisemartin, C., & D’Haultfœuille, X. (2018). Fuzzy differences-in-differences. The Review of Economic Studies, 85(2), 999–1028.

    Article  Google Scholar 

  • Elinder, M., Erixson, O., & Waldenström, D. (2016). Inheritance and wealth inequality: Evidence from population registers. CEPR discussion papers 11191, C.E.P.R. discussion papers.

  • Guiso, L., & Jappelli, T. (2002). Private transfers, borrowing constraints and the timing of homeownership. Journal of Money, Credit and Banking, 34(2), 315–339.

    Article  Google Scholar 

  • Jappelli, T., & Padula, M. (2016). The consumption and wealth effects of an unanticipated change in lifetime resources. Management Science, 62(5), 1458–1471.

    Article  Google Scholar 

  • Jappelli, T., Padula, M., & Pica, G. (2014). Do transfer taxes reduce intergenerational transfers? Journal of the European Economic Association, 12(1), 248–275.

    Article  Google Scholar 

  • Jappelli, T., & Pistaferri, L. (2017). The economics of consumption: Theory and evidence. Oxford: Oxford University Press.

    Book  Google Scholar 

  • Keen, M., de Mooij, R., Eyraud, L., Tyson, J., Bond, S., & Walters, L. (2012). Italy: The Delega Fiscale and the strategic orientation of tax reform. IMF country report no. 12/280, International Monetary Fund, Washington, DC.

  • Kleven, H. J., Knudsen, M. B., Kreiner, C. T., Pedersen, S., & Saez, E. (2011). Unwilling or unable to cheat? evidence from a tax audit experiment in Denmark. Econometrica, Econometric Society, 79(3), 651–692.

  • Lewbel, A. (2007). Estimation of average treatment effects with misclassification. Econometrica, 75(2), 537–551.

    Article  Google Scholar 

  • Longobardi, E. (2013). On the role of the property tax in financing local expenditure: The case of Italy. Presented at the workshop “Interaction between local expenditure responsibilities and local tax policy”, 12–13 September, Copenhagen.

  • Messina, G. & Savegnago, M. (2014). Beyond the acronyms: Local property taxation in Italy. Occasional papers no. 250, Bank of Italy, Rome (in Italian).

  • Nordblom, K., & Ohlsson, H. (2006). Tax avoidance and intra-family transfers. Journal of Public Economics, 90(8–9), 1669–1680.

    Article  Google Scholar 

  • Slack, E., & Bird, R. M. (2014). The political economy of property tax reform. OECD working papers on fiscal federalism no. 18, OECD, Paris.

  • Slemrod, J. B., & Gillitzer, C. (2013). Insights from a tax-systems perspective. Ross School of Business paper no. 1206, University of Michigan, Ann Arbor.

  • Stiglitz, J. E. (1985). The general theory of tax avoidance. National Tax Journal, 38(3), 325–337.

    Google Scholar 

Download references


We would like to thank Tullio Jappelli, Alex Solis, Salvatore Morelli and all the participants at the CSEF seminars and at the XXVII SIEP Meeting. Ohlsson presented some of the ideas in the theory section at a workshop on inheritance and wealth organized by Oslo Fiscal Studies 8–9 March 2013. We thank conference and seminar participants at the SIEP 2015 Ferrara conference and DISES, Napoli, for helpful comments and suggestions. Di Porto gratefully acknowledges financial support from Riksbankens Jubileumsfond and Handelsbankens forskningsstiftelser. The authors declare that they have no relevant or material financial interests that relate to the research described in this paper. The usual disclaimers apply. The views expressed in this paper are solely the responsibility of the authors and should not be interpreted as reflecting the views of Sveriges Riksbank.

Author information

Authors and Affiliations


Corresponding author

Correspondence to Enrica Maria Martino.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Di Porto, E., Martino, E.M. & Ohlsson, H. Avoiding taxes by transfers within the family. Int Tax Public Finance 28, 1–23 (2021).

Download citation

  • Published:

  • Issue Date:

  • DOI:


JEL Classification