Re-evaluation of shareholdings and land stabilized with the 2025 Italian Budget Law

published on 13 FebraryJanuary 2025 | reading time approx. 4 minutes

The 2025 Italian Budget Law (Law no. 207, art. 1, para. 30 of 30 December 2024), introduced something significantly new in the Italian tax landscape - the stabilization of the re-evaluation of the tax cost of shareholdings and land for non-entrepreneurs. This measure, which had already been subject to annual extensions, has now become a permanent provision, consolidating and expanding an important option for tax planning.

Scope of application

This measure applies to individuals, simple partnerships, non-commercial entities and non-resident entities without a permanent establishment in Italy, holding, as of 1 January of each year, (listed or unlisted) shareholdings and (agricultural or buildable) land. The re-evaluation provides for the payment of a substitute tax at a flat rate of 18 percent by 30 November of the same year and, for unlisted shareholdings and land, the filing of a sworn appraisal by the same date.

Subjective requirements

The measure is reserved for:

individuals, for transactions not attributable to the exercising of a business activity;
simple partnerships and persons considered as such;
non-commercial entities, provided that the transactions from which the income derives are not inherent to the business activity;
non-resident persons (for capital gains from the transfer of shareholdings in Italian companies which are not attributable to permanent establishments, except for shareholdings benefiting from para. 2-bis of art. 68 of the CIT).

Re-evaluation of tax cost

The procedure for re-evaluating tax cost varies according to the type of asset:

Unlisted shareholdings: the value is determined by a sworn appraisal which must refer to the value of the company's entire equity as of 1 January. The professionals qualified to draw up and asseverate this appraisal are: Chartered Accountants and Accounting Experts, Statutory Auditors and experts registered with the Register of Companies.
Listed shareholdings: the value is calculated based on the arithmetic average of the prices recorded in December of the previous year, in accordance with art. 9, para. 4, letter a) of the CIT. As clarified by the Italian Revenue Agency, the taxpayer must prepare a summary statement containing for each shareholding the average market prices and the relative arithmetic average.
Land: the reference value is quantified on the basis of a sworn appraisal to determine its value as of 1 January of the reference year. This appraisal is based on objective criteria that include the nature of the land, its location, urban characteristics and possible uses.

For all types of assets, the substitute tax is applied on the appraised or normal value.

Operating procedures and fulfilments

To complete the re-evaluation, a tax of 18 percent on the appraised or normal value needs to be paid by 30 November of the same year. In the case of an option to pay the substitute tax in instalments (maximum three annual instalments), interest of 3 percent per annum must be calculated on each instalment following the first. The deadlines for subsequent instalments are 30 November of the following two years.

In addition, specific paperwork is required:

for unlisted shareholdings, the appraisal must be prepared and asseverated by 30 November. The taxpayer must keep the sworn appraisal and the identification data of the professional who drafted it and submit it, upon request, to the Italian Revenue Agency;
for listed shareholdings, a summary statement must be prepared containing the average prices in December and their arithmetic average. This documentation must be kept and submitted, upon request, to the Italian Revenue Agency;
for land, the appraisal must be prepared and asseverated by 30 November. The taxpayer must keep the sworn appraisal and the identification data of the professional who drafted it and submit it, upon request, to the Italian Revenue Agency.

If the sworn appraisal is prepared:

on behalf of the same company or entity holding the relevant shareholdings, the cost of preparing it is deductible from the business income on a straight-line basis in the year in which it is incurred and in the following four years;
on behalf of all or some of the holders of the shareholdings the cost of preparing it is added to the purchase value of the shareholdings in proportion to the cost actually incurred by each of the holders.

Assessment of economic expediency and conclusions

The full stabilization of the re-evaluation of shareholdings and land is an important tax planning tool for taxpayers, providing regulatory certainty and procedural simplification. The regulatory framework outlined by the 2025 Italian Budget Law is an important step towards the greater efficiency and stability of the Italian tax system.

In any case, the decision to opt for re-evaluation requires careful analysis of expediency. For there to be a tax saving, the 18 percent substitute tax applied on the value of the shareholdings or land should be lower than the 26 percent tax that would be paid on the capital gain on transfer in the absence of re-evaluation.

Moreover, the complexity of compliance and the need for accurate economic evaluation require the support of qualified professionals to maximise tax benefits and minimise the risk of errors.