Italy: Capital gains on “qualifying shares” | KPMG | GLOBAL

Italy: Capital gains on “qualifying shares,” proposed tax changes

Italy: Capital gains on “qualifying shares”

The draft budget law 2018 (expected to be approved by the end of 2017) proposes an increase in taxes applicable to gains realized on the disposal of “qualifying shares” of Italian companies. If approved, the provision would be effective as of 1 January 2019 and would specifically affect non-resident entities.

1000

Related content

Shares are defined as “qualifying shares” if:

  • Representing more than 20% of the voting rights or 25% of the share capital of a non-listed Italian company, or
  • Incorporating more than 2% of the voting rights or representing more than 5% of the share capital of a public company

Background

Currently, Italian domestic law provides that capital gains arising from qualifying shares owned by foreign entities (except for shares owned through an Italian permanent establishment) are taxed as follows: 

  • A portion (49.72%) of gains realized in 2017 are taxable at a corporate income tax rate of 24%, with a possible effective tax rate of 11.93%.
  • A portion (58.14%) of gains realized from 1 January 2018 are taxable at a corporate income tax rate of 24%, with a possible effective tax rate of 13.95%. 

Proposed change to tax treatment

The draft budget law 2018 proposes to replace the current tax treatment with a “flat” 26% substitute tax—that would be aligned with the capital gains tax of “non-qualified shares” and gains realized by “physical persons.”

 

Read a November 2017 report [PDF 162 KB] prepared by the KPMG member firm in Italy

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit