Italian tax authorities published Circular No. 17/E of 29 July 2024, clarifying the tax treatment of qualifying capital gains earned by non-resident entities.
The Circular was released following the amendments introduced by the Budget Law for 2024, which went into force on 1 January, 2024.
The law of 30 December, 2023, no. 213 (referred to as the 2024 Budget Law) made changes to the tax regime on capital gains from qualified shareholdings realised by non-resident commercial companies and entities. It is important to note that the clarifications related to the provision in question do not take into account the possible applicability of double taxation agreements made by Italy.
The Circular states capital gains realised by non-resident entities from the sale of shares in resident entities are exempt from capital gain tax for 95% of their value under the participation exemption regime. This exemption applies provided that the non-resident entity is based in an EU Member State or an EEA country that facilitates information exchange with Italy and is subject to corporate income tax in that jurisdiction.
The tax authorities have provided clarification on qualifying participations and the conditions that non-resident entities must meet, along with the calculation of the applicable capital gains.
