Intergenerational Wealth Inequality in Europe: Demographic Pressures and Inheritance Taxation in Italy and France

Europe is characterised by a markedly unequal distribution of wealth. According to the most recent wave of the Household Finance and Consumption Survey (HFCS) conducted by the European Central Bank, the richest ten per cent of Europeans own approximately two-thirds of total net wealth, while the bottom half holds barely more than one per cent (Eurofound, 2025). At the same time, the continent is ageing rapidly, with the share of the population aged 65 and over expected to rise substantially in the coming decades, placing increasing pressure on pension systems and reshaping demographic structures across Member States (Eurostat, 2023).

In a context of rising wealth concentration and population ageing, intergenerational transfers risk further amplifying existing inequalities. Large inheritances tend to consolidate wealth within a small segment of the population, and in low-growth economies inherited wealth accounts for an increasing share of total private wealth (Piketty, 2014). The scale of these forthcoming transfers has led researchers to speak of a Great Wealth Transfer, whose distributional consequences will depend critically on the institutional frameworks in place to govern them.

This article examines the interplay between demographic dynamics, wealth concentration and the design of inheritance taxation in Italy and France. To assess how wealth is distributed in these two major EU economies, which operate markedly different inheritance tax systems, the analysis draws on microdata from the HFCS, a harmonized dataset that provides comparable information on household wealth, demographics and intergenerational transfers across Europe. Household net wealth is defined as the difference between total assets and liabilities, and all estimates are weighted to ensure representativeness. The distribution of wealth is analysed across age groups, allowing the capture of both the overall level of inequality within each country and the way wealth is distributed across generations.

Wealth concentration and demographic ageing

The relationship between age and wealth is traditionally analysed through the life-cycle theory, which predicts a hump-shaped wealth profile increasing with age until retirement and declining thereafter. However, empirical research has shown that wealth decumulation among older cohorts is often limited, particularly among wealthier households, due to precautionary saving motives and bequest intentions (De Nardi, 2004). Wealth therefore tends to remain concentrated among older cohorts.

The high concentration of wealth in Europe is systematically more pronounced than that of income. According to the World Inequality Report, the top ten per cent holds between 50 and 60 per cent of total wealth, while the bottom half owns a negligible share (World Inequality Lab, 2022). Several studies highlight the crucial role of inheritances in sustaining this concentration (Alvaredo et al., 2017). EU countries exhibit considerable heterogeneity: some Eastern European countries rank among the most equal, while Italy, France and Germany display significantly higher levels of concentration.

Source: Own calculations based on HFCS European Central Bank

Italy: demographic pressures and wealth concentration

For Italy, Acciari, Alvaredo, and Morelli (2024) document a marked increase in wealth concentration since the mid-1990s, associated with the abolition of the inheritance tax in the early 2000s and the appreciation of financial and real estate assets. The Italian population pyramid displays a pronounced concentration of individuals aged between 40 and 60, reflecting the demographic bulge of cohorts born between the late 1960s and early 1980s, while younger cohorts appear markedly smaller. The wealth pyramid mirrors this pattern almost one-to-one: mean net household wealth is strongly concentrated among individuals aged 40 to 60, coinciding with peak labour income years and the highest rates of asset accumulation. The demographic imbalance implies that a large stock of wealth is held by cohorts that will progressively transfer their assets to generations that are numerically much smaller, mechanically intensifying wealth concentration over time.

Looking at figure 1.a, within-cohort inequality is equally pronounced where aggregate wealth is most concentrated. In the 51–60 age group, the mean level of net wealth is more than twice the median, signalling a highly right-skewed distribution, and the richest quarter of households controls nearly three times as much wealth as the remaining three-quarters combined. The forthcoming intergenerational transfer will therefore involve not only large amounts of wealth, but also a highly unequal distribution of bequests.

These dynamics are especially relevant in a context where intergenerational mobility is comparatively low by international standards, with socioeconomic outcomes depending strongly on parental background. Over the past two decades, wealthy inheritors in Italy have also experienced a declining effective tax burden: a smaller share of large bequests is subject to taxation and average tax rates on large inheritances have fallen, weakening the progressivity of the system (Boserup et al., 2016; Nolan et al., 2020). The combination of demographic concentration, high within-cohort inequality and a lenient inheritance tax regime suggests that the forthcoming wave of transfers may further entrench existing disparities.

France: a more balanced but evolving trajectory

The French trajectory presents a different picture. Most income growth occurred during the Trente Glorieuses (1945–1980), when per-adult income grew at close to four per cent per year, accompanied by a marked decline in inequality (Garbinti, Goupille-Lebret and Piketty, 2018). Since the 1980s, inequality has increased again, though less dramatically than in Anglo-Saxon economies. HFCS data show that French wealth is relatively well distributed across older cohorts, with no extreme concentration in a single age group. The gap between mean and median wealth within age groups is moderate, underscoring the central role of the middle class. France’s comparatively large younger cohorts suggest that intergenerational transfers may be absorbed by a broader base of recipients, reducing the purely demographic pressure toward concentration.

Inheritance taxation: two contrasting models

Despite their potential as redistributive instruments, only 19 out of 27 EU Member States levy inheritance taxes, and in most cases the revenue collected is marginal. Only France and Belgium generate more than one per cent of total tax revenues from inheritance-related taxation (OECD, 2021).

France operates a double-progressive system, in which progressivity applies simultaneously to the value of the inherited assets and to the degree of kinship between the deceased and the beneficiary. Rates rise substantially for larger estates and for heirs outside the immediate family. This approach assigns a meaningful redistributive role to inheritance taxation and may also incentivize later transfers, mechanically raising observed wealth holdings at older ages.

Italy applies progressivity exclusively based on kinship, without progressive brackets tied to estate value. Tax rates are comparatively low and paired with generous allowances for close relatives, substantially reducing the taxable base. The broader European landscape further illustrates this diversity: Sweden and Norway abolished inheritance taxation entirely, while a recent Swiss referendum, although rejected, signalled renewed interest in taxing concentrated wealth (Financial Times, 2025).

Conclusion

This article has shown that wealth inequality remains a central and persistent challenge across Europe, closely linked to demographic ageing and the institutional design of intergenerational transfers. The comparative analysis of Italy and France reveals how different demographic structures and tax regimes produce markedly different distributional outcomes. In Italy, the combination of a pronounced demographic imbalance, high within-cohort inequality, low intergenerational mobility and a lenient inheritance tax regime creates conditions under which the forthcoming Great Wealth Transfer is likely to reinforce wealth concentration across generations. France, by contrast, displays a more balanced demographic structure, a stronger middle class and a more progressive inheritance tax system, suggesting a lower risk of sharp increases in concentration driven by demographic forces alone, although rising top incomes and capital returns since the 1980s indicate that distributional pressures remain present.

A key insight emerging from this comparison is that the fragmentation of inheritance taxation across the European Union limits the effectiveness of these instruments in addressing wealth inequality. Large differences in tax rates, exemptions and timing of transfers weaken their redistributive capacity and create incentives for cross-border tax planning. Rather than full harmonization, the findings of this analysis support the introduction of a common European baseline for inheritance and gift taxation, establishing shared principles such as minimum progressivity for large bequests and consistent treatment of cross-border transfers, while allowing Member States to tailor specific features to national preferences. Without policy intervention, the forthcoming wave of intergenerational transfers risks entrenching inherited advantage and undermining equality of opportunity across the continent.

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