The chair of Ferrari and Stellantis has agreed to do one year of community service and jointly pay millions of euros to settle a dispute over inheritance tax in Italy.

John Elkann and his siblings Lapo and Ginerva will pay €183m (£159m) to Italian tax authorities, Italian prosecutors said, according to multiple media reports.

Mr Elkann’s lawyer said the agreement did not include an admission of liability from the Ferrari chair and his siblings.

He said the prosecutors’ decisions were an opportunity to bring “this painful affair to a swift and definitive close”.

Mr Elkann, a member of one of the most powerful families in Italy, is the grandson of Gianni Agnelli, the former boss of Fiat.

The tax dispute relates to the estate of Mr Elkann’s grandmother, Marella Caracciolo, who died in 2019.

Mr Elkann will need to suggest where he could do his community service, which Reuters reported could include helping at a centre for the elderly or a centre helping people with drug addiction.

Paolo Siniscalchi, the Elkanns’ attorney, said in a statement to the BBC: “John Elkann’s request for probation must be viewed in this context and does not entail, just as the settlement with the tax authorities does not, any admission of responsibility.

“If this request is granted, the proceedings against him will be suspended, and upon the successful completion of the probationary period, will conclude with a ruling extinguishing all the charges for which John Elkann is currently under investigation.

“This outcome would mirror that of his siblings Ginevra and Lapo, for whom dismissal of charges has been requested.”

Prosecutors had alleged the Elkann siblings failed to declare roughly €1bn in assets and €248.5m in income, on the basis their grandmother was a Swiss resident.

Prosecutors on Monday accepted the agreement to pay millions, and have asked the judge to drop a criminal case against Mr Elkann’s brother and sister, which was dismissed.

The case stems from a wider dispute between the Elkann siblings and their mother, Margherita Agnelli over the estate of Gianni Agnelli. A civil case is ongoing.

Mr Agnelli died more than 20 years ago after building Fiat up from a small car manufacturer into a major conglomerate.

Ms Agnelli, who inherited €1.2bn euros, has been fighting to overturn agreements she signed in 2004 after her father’s death in an attempt to ensure that money goes to her five children from a second marriage and not to her three eldest.

Ms Agnelli’s lawyers said in a statement that they welcomed the outcome of these tax and criminal proceedings.

Mr Elkann is the oldest of Ms Agnelli’s children. He has been chair of Stellantis since 2021, and became chair of Ferrari in 2018, according to Stellantis.

He first joined Fiat’s board in 1997 and was previously the company’s chair.