Budget Law 2024: an increase in rates for real estate properties and financial assets held abroad is expected

Edited by Pasquale Salvatore, Marco Ruzza, Stefania Medda and Alessandro Arace

The 2024 Budget Bill could introduce significant changes in relation to the Italian wealth taxes on assets held abroad by subjects who are tax residents of Italy.

The payment of wealth taxes, namely “Ivie” and “Ivafe”, respectively due on real estate properties and financial assets held abroad is regulated by art. 19, paragraphs 13 to 22 of Legislative Decree no. 201/2011 (so-called Save Italy Decree converted by Law no. 214/2011).

Ivafe applies to the value of financial assets, bank accounts and savings accounts held abroad, considering the percentage of ownership in case of joint ownership of the financial asset and the number of days of ownership.

The prerequisite for the application of the Ivie is the ownership of real estate properties located abroad for any intended use.

Starting from 2014, Ivafe is due at 0.2% of the value of the financial asset as of 31 December or the market value recorded at the end of the holding period in the case of interim transfer. In case of bank accounts the tax is applied at fixed amount of 34.20 Euros.

Ivie is now due at the rate of 0.76% or 0.4% where the foreign property is used as the taxpayer’s main residence. The tax rate applies to the cadastral value of the property or to its purchase cost or market value depending on whether it is located in a state that is part of the EU/EEA or in a non-EU/EEA state.

A credit equal to any wealth tax paid in the foreign country is deductible from the Italian wealth tax due.

Article 23 of the 2024 Budget Decree, amending article 19 of Legislative Decree no. 201/2011 with the insertion of a new paragraph 20 bis, increases the Ivafe rate from 0.2% to 0.4%, in case of financial assets held in states or territories deemed with privileged taxation as identified by the Ministerial Decree of the Ministry of Economy and Finance of 4 May 1999 and subsequent amendments.

It is worth noting that Switzerland is out of the scope of the provision regarding the increase in the Ivafe rate being no longer included, starting from the 2024 tax period, among the countries and territories listed in the Ministerial Decree of 4 May 1999. Financial assets held in Switzerland will remain therefore subject to Ivafe at 0.2% tax rate.

Paragraph 15 of article 19 of Legislative Decree no. 201/2011 is also amended by foresing, in a generalized manner, the increase of the Ivie rate, which rises from 0.76% to 1.06%.

The new provisions will apply starting from the 2024 tax period.

For a deeper discussion, please contact:

Pasquale Salvatore

PwC TLS Avvocati e Commercialisti

Partner

Marco Ruzza

PwC TLS Avvocati e Commercialisti

Director

Stefania Medda

PwC TLS Avvocati e Commercialisti

Director