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Convenience test for revaluations

21 October, Il Sole 24 Ore

The plan for redefining the terms regarding corporate shares and developable farmer land, coming soon with a regulation in 2018, risks not having much of appeal. The reason is that such a possibility has been granted since 2002 and, most likely, the number of transactions regarding participations transfers and developable areas have been much less than then certified appraisals.

For what concerns revaluations, we must consider also that it will be soon introduced the substitute tax at 26% on all the capital gains originating from participations transfers, qualified or not.

In fact, considering the redetermination tax-rate of 8%, if the capital gain is minimal, it’s more convenient applying the ordinary taxation at 26% on the capital gain itself. Regarding this, it’s worth noting that the future taxation at 26% is less convenient than the standard Irpef on the 49.7% of the taxable income, therefore there must be a slight interest in the revaluation.

Considering the upcoming changes, it’s convenient to revaluate the capital gains when these are over 30.76% of the sold amount, as 26% of 30.76 gives a result equal to 8 which is the value of the substitute tax applied in case of revaluation.

Regarding developable areas, there might be a little interest to revaluate in presence of a dynamic recovery of the property market in some areas of the country. Also, in this case, it’s necessary to remind that for the transfer of land for construction purposes (article 67, letter b of Tuir code) is possible to determine the Irpef with the separate taxation and that, in case of little profitability, it can stop at 23% on the capital gain: therefore, the 8% substitute tax on the gross value might be higher than the standard taxation.

Source: Il Sole 24 Ore

Translator: Cristina Ambrosi

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