In order to standardise the taxation criteria previously in force, paragraphs 96 to 99 of the 2023 Budget Law (No. 197 of 29 December 2022) amended the regulations on the taxation of capital gains realised by companies residing abroad but holding real estate in Italy.
As is well known, a capital gain is realised when there is a positive difference between the purchase value of an asset and the subsequent disposal value of said asset.
Prior to the recent change, only transfers involving shares in Italian companies were subject to Italian taxation.
Now, however, capital gains realised through the sale of shares belonging to foreign companies (or entities), more than fifty percent of whose value comes from real estate located in Italy, will also be subject to taxation in Italy.
However, this legislation will only be applicable to transactions conducted on unregulated markets.
The new legislation is identified in paragraph 1 bis to Article 23 of the TUIR, added precisely on the basis of the 2023 Budget Law. The new paragraph provides as follows: “Income realised through the onerous transfer of shares in non-resident companies and entities, more than half of the value of which is derived, at any time during the 365 days preceding their transfer, directly or indirectly, from immovable property located in Italy, shall be deemed to be produced in the territory of the State. The provision of the preceding sentence shall not apply with reference to the transfer of shares traded on regulated markets”.
However, when assessing the composition of a company’s assets, real estate to be qualified as goods and capital assets that are located in Italy are excluded from the scope of the abovementioned legislation.
A further change made by the 2023 Budget Law concerns Article 5 of Legislative Decree No. 461/97, concerning the substitute tax applicable to capital gains and other income pursuant to Article 67, paragraph 1, sub-paragraphs c – c-quinquies of the TUIR. The new paragraph 5 bis provides that “The provisions of paragraph 5 do not apply to income deriving from the disposal of shares in companies and entities, not traded on regulated markets, more than half of the value of which directly or indirectly derives, at any time during the 365 days preceding their disposal, from real estate located in Italy.”
This article thus provides for the applicability of the 26% substitute tax on other financial income arising from the sale of shares of foreign companies referred to in Article 23, paragraph 1 bis, TUIR.
Author: Francesca FERRARI, Tassinari & Damascelli Studio Notarile, Bologna