2025 Budget Law (Law no. 207/2024) Paragraph 30 lays out the official framework for the revaluation of tax expenditure regarding equity holding (both listed and unlisted) and land (agricultural and developable), consolidating a provision that has been subject to numerous extensions in the past.
This very regulation, mainly administered by articles 5 and 7 of Law no. 448/2001, applies to assets owned on 1 January of every year and allows taxpayers to redeem significant tax breaks.
The subjective requirements needed to benefit from the regime remain unchanged, confirming admission to:
- physical persons, for operations not included in a business capacity;
- simple partnerships and comparable subjects pursuant to art. 5 of the Income Tax Consolidation Act (TUIR);
- non-commercial entities, if the operation from which the income derives is not carried out in a business capacity;
- non-resident subjects without a permanent establishment in Italy.
The objective requirements also remain unchanged compared to previous versions. The revaluation is in fact applicable to:
- equity holding, whether traded on regulated markets or in multilateral trading (listed equity holding) or non-trading (unlisted equity holding) systems;
- Land, whether developable or for agricultural use.
In order to benefit from the regime in question, the taxpayer must:
- provide documentation certifying the value of the equity holding/land. Specifically, in the case of unlisted equity and land, the revaluation value must be determined through a sworn appraisal drawn up by qualified professionals pursuant to Article 64 of the Italian Civil Procedure Code, concerning the value of the unlisted equity holding or land as of 1 January of the year in reference. In the event of listed equity, the revaluation value is reflected in a table containing the data relating to the normal value of share capital determined by the arithmetic mean of the prices recorded in the month of December of the previous year (pursuant to Article 9, paragraph 4, letter a) of the Income Tax Consolidation Act (TUIR);
- carry out the payment of the substitute withholding tax. The substitute withholding tax must be paid by 30 November of each year, in a lump sum payment or through three evenly distributed annual installments. In the event of payment in installments, interest is due at the rate of 3% per year, to be paid alongside each installment.
The aforementioned compliance must be completed by 30 November of the year in which the taxpayer intends to redeem the revaluation provision.
The main feature that’s part of the latest addition in legislative intervention is linked to the increase in the substitute withholding tax rate, rising from 16% to 18%: this change inevitably reduces the appeal of the revaluation.
In order to make sure the simplified regime pays off, it is necessary for the substitute withholding tax of 18% applied to the value of the equity holding or land to be less than 26% of the capital gain realized in the absence of exemption: this shall occur only when the capital gain realized is greater than 69.23077% of the value of the asset under reassessment.
