Budget Law for 2024 – Key Tax Updates

 

Introduction

The Budget Law for 2024 (Law No. 231/2023) was published in the Gazzetta Ufficiale on December 30, 2023, introducing a series of tax-related innovations.

The Budget Law for 2024 comes into effect on January 1, 2024, unless otherwise specified for individual measures. In this newsletter, we highlight the most significant and relevant measures for tax purposes, as well as those related to investments and financial support for businesses.

 

Redetermination of Land and Equity Purchase Values

The regime for the redetermination of the tax cost of unlisted equity investments, pursuant to Article 5 of Law No. 448/2001, is once again extended. This applies also to equity investments traded on regulated markets or multilateral trading systems. Additionally, the revaluation of lands (agricultural and building) as per Article 7 of Law No. 448/2001 is also extended.

For 2024, individuals, simple companies, non-commercial entities, and non-resident entities without a permanent establishment in Italy can still revalue the cost or purchase value of participations and lands owned as of January 1, 2024, outside the business regime. This allows the full or partial offsetting of realized capital gains.

To redetermine the value of unquoted participations and lands, a certified appraisal by a qualified professional must be submitted by June 30, 2024.

For the redetermination of the cost of securities, shares, or rights traded on regulated markets or multilateral trading systems as of January 1, 2024, the new paragraph 1-bis of Article 5 of Law No. 448/2001 allows using the fair value determined based on the arithmetic average of prices observed in December 2023, per Article 9(4)(a) of Legislative Decree No. 917/1986.

The redetermination of the tax cost for equity investments (both quoted and unquoted) and lands in 2024 involves a one-time 16% substitute tax, payable:

• For the full amount by June 30, 2024;
• Alternatively, if choosing installment payments, in three annual installments of equal amounts due on June 30, 2024, June 30, 2025, and June 30, 2026. Subsequent installments must include 3% annual interest from June 30, 2024.

The redetermination is completed with the payment of the total substitute tax due or the first installment by June 30, 2024.

 

Fringe Benefits 2024 – Increase in Exemption Threshold

The Budget Law for 2024 establishes an increase in the fringe benefits non-taxable threshold for 2024, raising it from 258.23 euros to:

• 1,000 euros for all employees;
• 2,000 euros for employees with dependent children.

The limit also covers amounts paid or reimbursed by the employer for:

• Domestic utility bills for integrated water services, electricity, and natural gas;
• Expenses for renting the primary residence or interest on the mortgage for the primary residence, for all employees (with or without children).

 

Capital Gains on Participations by Non-Resident Companies

Starting in 2024, capital gains realized by non-resident commercial entities, if also taxed in Italy, are subject to a 26% substitute tax on only 5% of the total amount. For example, if the capital gain amounts to one million euros, the taxable base is 50,000 euros, and the substitute tax is 13,000 euros.

From a subjective perspective, the benefit is reserved for companies and commercial entities residing in European Union or European Economic Area countries.

The participations must:

• Be qualified (generally exceeding 20%);
• meet the requirements of Article 87 of the Income Tax Consolidation Act (excluding, for example, participations in real estate companies).

The change affects sales made by companies based in France and Cyprus; for companies residing in other European countries, capital gains are taxed only in their respective residence states based on international agreements.

 

Expired Roles for Amounts Exceeding 100,000 euros – Prohibition of Offset in the F24 Model

The Budget Law introduces a prohibition to offset in the F24 model, under Article 17 of Legislative Decree No. 241/97, for expired debts related to taxes or executive assessments, with total amounts exceeding 100,000 euros. The ban applies to all taxpayers (individuals, companies, and entities).

The prohibition applies if there are no suspension measures and persists until the violation is completely resolved. Consequently, the ban seems to persist if the taxpayer has a plan to defer the amounts listed in the role.

In the absence of suspension measures, the only way to offset is to settle the expired debts by paying them.

The new provisions apply from July 1, 2024. In case of improper offsetting, a 30% penalty is imposed.

 

Submission of F24 Models with Offsets – Extension of the Obligation to Use the Revenue Agency’s Telematic Services

It is established, in a generalized manner, that payments are made exclusively through the telematic services provided by the Revenue Agency for submitting F24 models, also in cases where offsets are made for credits accrued for contributions and premiums owed to the INPS and INAIL, respectively.

The new provisions apply from July 1, 2024.

Regarding INPS and INAIL credits, it is specified that the effectiveness and progressive implementation of the new provisions will be defined by measures agreed upon by the Revenue Agency, INPS, and INAIL.

 

Tax Credit for the Single Southern Economic Zone (ZES) – Refinancing

The tax credit for investments in the Single Southern Economic Zone (ZES), as per Article 16 of Decree Law No. 124/2023, is recognized within the overall spending limit of 1.8 billion euros for 2024.

 

Sabatini Law – Refinancing

In relation to the so-called “new Sabatini Law,” as per Article 2 of Decree Law No. 69/2013, an additional allocation of 100 million euros is provided for in 2024.

 

Plastic Tax and Sugar Tax – Postponement

The effectiveness of provisions related to the consumption tax on single-use artifacts (so-called “plastic tax”) and the consumption tax on sweetened non-alcoholic beverages (so-called “sugar tax”) is further postponed to July 1, 2024.

 

Mandatory Catastrophic Risk Insurance for Resident Companies and Non-Resident Companies with Permanent Establishments

A requirement to take out insurance coverage for protection against catastrophic risks is introduced by December 31, 2024, for companies obligated to register with the Business Register under Article 2188 of the Civil Code:

• With legal headquarters in Italy;
• With legal headquarters abroad but having a permanent establishment in Italy.

The obligation does not apply to agricultural companies (Article 2135 of the Civil Code), which are covered by the Fund under Article 1, paragraph 515 ff., of Law No. 234/2021.

The policy covers damages:

• Related to assets identified in Article 2424, paragraph 1, of the Civil Code, Section Active, item B-II, nos. 1, 2, and 3 (land and buildings, plants and machinery, industrial and commercial equipment);
• Directly caused by natural disasters and catastrophic events occurring in the national territory (earthquakes, floods, landslides, floods, and overflows).

If the obligation is not fulfilled, it must be considered in the “allocation of contributions, subsidies, or financially advantageous benefits from public resources,” even concerning those provided in the event of calamitous and catastrophic events.

 

Inventory Regularization

Under certain conditions, businesses can adjust their inventory to reflect the actual stock levels. The option includes:

• Eliminating initial quantities or values higher than actual;
• Recording initial quantities previously omitted.

The option for inventory regularization applies to the tax year ending on September 30, 2023.

Businesses engaged in business activities that do not adopt international accounting principles, essentially, those not adopting OIC principles, can avail themselves of this option. Companies using simplified accounting are excluded.

The adjustment can involve inventories:

• Of goods used in the production or exchange activities of the business;
• Of raw and subsidiary materials, semi-finished goods, and other movable assets, excluding instrumental ones, purchased or produced for use in production.

The adjustment must be requested in the income tax return for the tax year ending on September 30, 2023.

In exchange for paying VAT and an 18% substitute tax, the values resulting from the adjustment:

• Are recognized for accounting and tax purposes from the tax year ending on September 30, 2023;
• Within the limit of the entered or eliminated value, cannot be used for tax assessments for previous tax years.

 

The firm remains available for any further clarification.