Italy: Revaluation of shareholdings

published on 29 April 2024 | reading time approx. 6 minutes

Law No. 213 of 30 December 2023 (Budget Law 2024), in Article 1, paragraphs 52 and 53, extended until 30 June 2024 the period available for the revaluation of shareholdings in companies, both listed and unlisted, held on 1 January 2024.

The drafting and asseveration of the appraisal and the payment of the 16 percent substitute tax that becomes due (or of the first installment), must be made by 30 June 2024.

The redetermination of the purchase cost or value of unlisted shareholdings was originally provided for by Article 5 of Law No. 448 of 28.12.2001 and has been extended several times by subsequent provisions; by applying this regime, certain entities are allowed to revalue the purchase cost or value of shareholdings held outside the business regime, franking all or part of the capital gains obtained, pursuant to Article 67, paragraph 1, letter n. c) - c-bis) of the TUIR.

Subjects eligible for the preferential regime

The restatement of the purchase cost or value of equity interests (listed and unlisted) is reserved for the subjects who carry out transactions liable to generate sundry income referred to in Article 67 comma 1 letter c) and c-bis) of the TUIR. In accordance with Italian Revenue Agency Circular N. 12 of 31.1.2002 (§ 1), the following persons are covered by the special provision:

natural persons, for transactions that do not pertain to the exercise of business activities;
simple partnerships and subjects treated as such pursuant to Article 5 of the TUIR;
non-commercial entities, in the case of transactions from which the income arises that are not carried out in the exercise of a business activity;
non-residents, in the case of capital gains deriving from the sale for valuable consideration of shareholdings in companies resident in Italy, not referable to permanent establishments, subject to the provisions of double taxation conventions which exclude their taxability in Italy.

Shareholdings eligible for subsidy

For the purposes of these rules, the following constitute evaluable shareholdings

shareholdings represented by securities (shares);
shareholdings in the capital or assets of companies not represented by securities (shares in limited liability companies or partnerships);
the rights or securities through which the aforesaid shareholdings may be acquired (e.g. option rights, warrants, bonds convertible into shares).

Shareholdings traded on the AIM Italia or other multilateral trading systems are considered listed (Circ. of the Italian Revenue Agency of 22 January 2021 n. 1 and of 23 December 2020 n. 32). It is worth emphasising that the regime in question may also concern shareholdings in a simple partnership or in a foreign company.

Unlisted shareholdings

For the revaluation of unlisted shareholdings, it will be necessary by 30.6.2024:

a qualified professional (e.g. a chartered accountant) prepares and certifies the appraisal of the shareholding as at the relevant date;
the taxpayer concerned pays the 16 percent substitute tax in full, or (in the case of installments) limited to the first of three equal annual installments.

To correctly estimate the convenience between the ordinary taxation regime (26 percent rate on capital gain) and this facilitating regime, it is important to remember that, in the latter case, the substitute tax (16 percent.) is applied on the entire value resulting from the appraisal of the unlisted shareholdings and therefore not only on the increase in value attributed (capital gain).

In the event of the transfer of the shareholdings, the date of preparation of the appraisal may also be subsequent to the notarised deed of transfer of the same.

Listed shareholdings

For the redetermination of the cost of securities, quotas or rights traded on regulated markets held as of 1.1.2024, the new para. 1-bis of Article 5 of Law No. 448/2001 provides for the possibility of assuming, instead of the purchase cost or value, the normal value determined on the basis of the arithmetic average of the prices recorded in the month of December 2023 pursuant to Article 9, para. 4, letter a) of the Consolidated Income Tax Act; therefore, a sworn expert's report by a qualified professional is not required for listed equity investments. This value must be subject to the 16 per cent substitute tax.

Deduction or refund of substitute tax already paid

In case the taxpayer intends to make use of the further revaluation of the shareholdings held (Art. 7 of DL 70/2011 and Circ. 47/2011, § 2)

he is not required to pay the outstanding installments of the previous revaluation
may deduct the substitute tax already paid from the tax due as a result of the new revaluation.

In addition, it is possible to request a refund of the substitute tax paid in the past:

within the forfeiture period of 48 months, pursuant to Article 38 of Presidential Decree 602/73;
calculated from the date on which the duplicate payment occurs, i.e., from the date of payment of the entire substitute tax, or of the first installments, relating to the last revaluation that is made.

Irrevocability of the option

According to the clarifications of Italian Revenue Agency Circulars 24.10.2011 No. 47 (§ 1.3) and 4.8.2004 No. 35 (§ 2), the completion of the redetermination of the cost or purchase value of shareholdings is a definitive option of the taxpayer who has made it. In the opinion of the tax administration, therefore, the taxpayer is not entitled to a refund of the tax paid and is obliged to complete the installments payment even when, for example, the redetermined value was not taken into account when determining the realised capital gains.

Fulfillments beyond 30 June 2024

The data relating to the revaluation of the value of the shareholdings must be indicated in the RT section of the UNICO Form relating to the tax period of reference of the revaluation (in the case in point in the UNICO PF 2024 - income 2023 form). However, as specified in the Italian Revenue Agency Circular N. 1/E of 15 February 2013, the failure to indicate in the UNICO Form the data relating to the revaluation carried out constitutes a formal breach, without prejudice to the effects of the revaluation.

The taxpayer must keep the sworn expert's report and the receipts of payment of the substitute tax, which must be exhibited or transmitted at the request of the tax authorities.