As is well known, donations are considered as “anticipated testamentary wills” and, as such, they are provided for in the second book of the Italian Civil Code, whose object is the inheritance. Donations, exactly as any other testamentary will, can violate the rights of the so-called “necessary heirs” (spouse, sons and daughters or further descendants and, in the absence of them, parents and others) to receive their own legitimate share of heritage, which is fixed by the law, notwithstanding and also against any will of the testator.

Namely, where, by one or more donations, the heir's legitimate share right has been violated, the heir him/herself may bring an action for reduction and obtain the allocation of the donated assets up to the amount of his or her rightful share.

The protection of the necessary heir is very strong and takes precedence over the rights of any third parties who have in the meantime acquired from the donee the real estate property object of the donation in question (up to twenty years after the donation and within ten years of the donor's death). In other words, a person who has purchased a real estate property from a donation may be required to return such real estate property even after a considerable period of time, pursuant to Article 563 of the Italian civil code (this is the so-called “restitution in kind”).

The consequence is quite relevant, both on an individual level – for those who purchased the real estate property and would lose it – and on a general level – for the certainty of trades and the reliable movement of goods.

In this context, the problem arises in respect of the rules applicable in the case of a so-called “indirect donation”: that is, where a person has not donated a property, but has paid the purchase price of a property which he/her has, however, registered in the name of a third party who, therefore, becomes the owner of the property benefiting from the same result as a donation.

According to a first orientation (Court of Cassation 12.05.2010 no. 11496), Article 563 of the Italian Civil Code would not apply in the case of an indirect donation: while it is true that with an indirect donation the same effect is obtained as that of making a person benefit from the purchase of a real estate property, the economic operation is different provided that the donor never becomes the owner of the property, but only uses money to cause the beneficiary to acquire the property.

The necessary heir, therefore, cannot be satisfied on the real estate itself, but only on its countervalue in money.

Subsequently, however, the Supreme Court changed its attitude and deemed that the action for restitution provided for by Article 563 of the Italian Civil Code may be brought against third-party purchasers even where the real estate has been the subject of an indirect donation (Court of Cassation 11.02.2022 no. 4523). The necessary heir could therefore obtain from the third party the restitution in kind of the real estate.

Now, in a very recent judgment, the Supreme Court (no. 35461 of 2.12.2022) has readdressed the subject and criticising its own earlier ruling and has given, instead, continuity to the first orientation. Indirect donation, in conclusion, is assimilated from a substantive point of view to a true and proper donation, but the consequences and effects of such indirect donation, both for the necessary heirs and – this is probably the most relevant aspect – for third-party purchasers, are quite different.

Even in the midst of the Christmas spirit, in conclusion, it should always be considered that gifts have a precise legal framework, can entail significant problems and therefore must be properly prepared.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.