The 2023 Budget Law modifies the evaluation criteria of capital gains deriving from properties located in the national territory, realized by subjects with tax residence abroad
The capital gains made by foreign entities they will be taxed in Italy if the income produced is connected – to an extent greater than 50 per cent – to assets located on Italian soil.
It is established in the Budget Law 2023 in which one intervenes, modifying them, on the criteria of taxation of capital gainsfocusing on those made by subjects with tax residence abroad, but with interests in Italy.
But what are capital gains? In the economic sphere, the term capital gain means the increase in value recorded in a specific period of time from movable and immovable property. An increase in wealth which from a fiscal point of view translates into an increase in the ability to pay and therefore liable to be taxed according to the regulations in force in each state.
What is the news on capital gains for foreign entities in the 2023 Budget Law?
The calculation of capital gains it is not always simple, especially in the case of an increase in value achieved by foreign subjects or with tax residence outside the national borders.
The Maneuver provides for an important modification of the legislation by intervening on two reference texts on the matter, the TUIR and the Legislative Decree n.461/97.
The main novelty introduced consists in the fact that the capital gains related to assets located in Italy will be considered as wealth produced within the country and consequently subject to national taxation, as happens for all the wealth produced on the Italian territory.
Here’s what changes in the taxation of capital gains for foreign subjects
What changes with the new standard? Analyzing it specifically, it can be seen that the capital gains subject to taxation in Italy will be only those realized through the sale of shareholdings belonging to foreign companies and/or entities whose value derives for more than 50 percent from properties located on the national territory.
However, these provisions will only apply to transactions carried out on non-regulated markets.
The measure goes to modify theart.23 of the TUIR (Consolidated Income Tax Act) which regulates the taxation of income produced in Italy by foreign entities.
The amendments take the form of the introduction, in article 23 of the Consolidated Law, of a paragraph 1-bis which, in fact, identifies all cases in which the capital gains are subject to taxation in Italy and those in which they are not, such as for example the transfers made in regulated markets.
The paragraph in question is as follows:
“1-bis. Miscellaneous income realized through the transfer for consideration of shareholdings in non-resident companies and entities, the value of which, for more than half, derives, at any time during the three hundred and sixty-five days preceding their transfer, directly or indirectly, from assets properties located in Italy are considered to be produced in the territory of the State. The provision of the first period does not apply with reference to the sale of securities traded on regulated markets.”
In the paragraph shown there is also the time reference, i.e. the 365 days preceding the sale of the equity investments.
With paragraph 2, however, the new law modifies theart. 5 of Legislative Decree n.461/97 introducing a paragraph 5-bis. In practice, the new paragraph aims to prevent the exemptions provided for by paragraph 5 from being applied to the capital gains covered by the law.
Let’s see in detail:
“5-bis. The provisions of paragraph 5 do not apply to income deriving from the sale of equity investments in companies and entities, not traded on regulated markets, the value of which, for more than half, derives, at any time during the three hundred and sixty-five days preceding their sale , directly or indirectly, from immovable property located in the territory of the State.”
In conclusion, with the introduction of this rule in Maneuver, we intervene in an important way on the criteria of taxation of capital gains and the definition of the cases in which they are subject to taxation in Italy.