Qualified investmens and Budget Law 2018

The Budget Law 2018 changed the tax treatment of capital gains deriving from the sale of a qualified participation in the share capital of a company, with starting date January 1, 2019.

Accordingly to article 67 of the TUIR (Italian Law for national income tax), qualified participations are those that grant voting right of more than 2% in a listed company (20% in case of non-listed company) or participation to the net worth of a company of more than 5% in a listed company (25% in case of non-listed company). Instead, no-qualified participations are those that do not exceed these limits.

The new regime provides for the application of a substitute tax equal to 26% on the amount of the capital gain realized when disposing of a qualified participation.

This determines, therefore, that such capital gains will no longer contribute to the formation of the total taxable income and will suffer the same tax treatment envisaged for the capital gains deriving from the sale of no-qualified equity investments.

The new capital gain regime, applicable to the capital gains realized starting from January 1, 2019, only concerns the owners of corporate shares outside of the scope of business activity.

Applying the guidelines stated by the Circular N. 11/E 2012 of the Revenue Agency, capital gains are intended to be realized “at the time when the sale of investments, securities and rights is completed rather than at the different moment in which the payment is made”.

The new fiscal discipline envisaged by the Budget Law 2018 also determines an important effect: from January 1, 2019, due to the same tax treatment that will be applied both to capital gain deriving from the transfer of qualified or non-qualified shares, it won’t be necessary to separate the two amounts any more. It will be then possible to offset capital gains realized with the sale of qualified investments with the losses deriving from the sale of no-qualified equity investments and vice versa.