Scandinavian Working Papers in Economics

Working Paper Series,
Uppsala University, Department of Economics

No 2016:4: AVOIDING TAXES BY TRANSFERS WITHIN THE FAMILY

Di Porto Edoardo () and Henry Ohlsson ()
Additional contact information
Di Porto Edoardo: UCFS, Postal: Department of Economics, Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden
Henry Ohlsson: Department of Economics, Postal: Uppsala University, P.O. Box 513, SE-751 20 Uppsala, Sweden

Abstract: 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 presence of a very low inter vivos gift tax, Italian families found it bene cial to redistribute proper- ties among their members. Di erence-in-di erence estimates indicate that property tax reform increased the probability that high-wealth donors made an inter vivos property gift by 3 percentage points and the size transferred by 4 square meters relative to less wealthy donors. Our estimates allow us to compute (back of the envelope) the amount of tax avoidance due to inter vivos transfer. The amount is around 78 million euros, or 4 percent of the annual tax revenue from principal residences.

Keywords: tax avoidance; property taxes; inter vivos gifts

JEL-codes: D11; D31; H27

35 pages, March 15, 2016

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