Controlled Realization Regime: New Qualification Requirements for Equity Investments and Holding Company Contributions in the IRPEF and IRES Reform Legislative Decree Implementing Law 111/2023

The recent draft decree implementing Articles 5, 6 and 9 of the enabling act for tax reform (Law 111/2023) introduces significant changes to the regime for equity contribution transactions, with a special focus on holding companies. These amendments aim to clarify and strengthen the requirements necessary to benefit from the controlled realization regime, governed by Article 177 co. 2-bis of the TUIR.

Nature of the Holding Company and Qualification Requirements

The new regulations stipulate that the nature of a holding company must be ascertained in accordance with Article 162-bis of the TUIR. This results in a valuation based on book values, rather than current values, ensuring greater stability and consistency in the criteria for qualifying holdings. The choice of book values makes it possible to avoid market fluctuations that could adversely affect the valuations of holding companies.

Minimum Percentages Test

The decree also introduces important changes regarding the minimum percentages test, which is to be applied only to “operating” companies directly owned by the holding company or any subholding controlled by it. One significant change is that the test is considered passed if the majority of the holdings meet the requirements, rather than all of them. This approach, based on book values, provides greater flexibility in the management of equity investments while reducing the rigidity of the system.

Listed Companies

A key provision of the new draft decree is that regarding listed companies, which are always considered “operating.” This means that such companies cannot qualify as holding companies, thus simplifying classification and reducing potential ambiguities in determining the nature of holdings.

Elimination of the Character of “Unipersonality”

Notable changes include the elimination of the “unipersonality” character of the transferee. Under current regulations, the transferee must be “wholly owned by the transferor.” The new provision removes this restriction, allowing greater freedom in the structure of contribution transactions and paving the way for more dynamic and adaptable corporate configurations.

Discipline of Demerger By Demerger

The implementing decree also deals with the tax regulation of demerger by spin-off, pursuant to Article 2506.1 of the Civil Code. The legislature’s decision to include demerger within the scope of Article 173 of the TUIR allows this new form of corporate reorganization to benefit from tax neutrality. This alignment with the “traditional” demerger provides additional flexibility tools for companies, facilitating reorganization operations without additional tax burdens.

The changes introduced by the draft implementing decree are an important step toward modernizing and simplifying the tax regime for corporate contribution and reorganization operations. The focus on the accounting nature of holding companies, the flexibility in the minimum percentage test and the tax neutrality of demergers by spin-off are elements that promote greater efficiency and transparency in the Italian tax landscape.