Prepared by Pasquale Salvatore, Raimondo Rossi and Matteo Esposito
The Relaunch Decree (art. 137, DL n. 34/2020, converted with amendments by L. n. 77/2020, published in the Italian Official Gazette 18.7.2020 n. 180) has formally re-opened the terms for the revaluation of participations held in non-listed companies held as at 1 July 2020 (special law introduced by art. 5, L. n. 448/2001). The revaluation is relevant for the calculation of taxable capital gain deriving from the transfer of the participations (art. 67(1)(c) and (c-bis), Italian Tax Code).
The special tax regime can be considered by taxpayers intending to transfer non-listed participations, as it avails to step-up the tax value of participations up to their market value, through the payment of a substitutive tax at 11% rate applied on the market value of the participation as at 1 July 2020.
The special tax regime can be opted by the following taxpayers:
- Italian tax resident individual acting out of the course of a business activity;
- Italian simple partnerships and non-commercial entities, if the participations are held out of the course of a business activity;
- non-Italian tax resident taxpayers with no permanent establishment in Italy.
To execute the revaluation, the following conditions shall be met by:
- the taxpayer shall be owner of the participations as at 1 July 2020;
- an appraisal of the market value of the participation as at 1 July 2020 shall be drafted by an Italian auditor or certified tax advisor and sworn by 15 November 2020;
- the substitutive tax shall be paid within 15 November 2020, entirely or in 3 annual installments. In this second scenario, interests at 3% annual rate apply for the second and third installments.
It is possible to deduct from the substitutive tax due any amount paid for previous revaluations made in relation to the same participations (art. 7(2), DL n. 70/2011).
For non-Italian tax resident taxpayers, the possibility to opt for the revaluation can be considered in case no Double Tax Treaty has been entered between Italy (as the source State of income) and the State of residence of the transferor of the Italian participations or, under the application of a Double Tax Treaty, if the taxing rights are allocated to Italy, e.g. due to the application of a land rich clause or a clause dedicated to the transfer of “relevant” participations.
The Relaunch Decree has reopened the terms also for the revaluation of the tax value of lands (agricultural or building) owned by the same subject entitled to benefit from the revaluation of participations as at 1 July 2020. Such revaluation can be opted for upon payment of 11% substitutive tax on the market value of the lands. The same conditions reported above for the revaluation of participations are applicable, including the obtaining of a sworn appraisal by a registered professional (e.g. architect, civil engineer).
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