Bad news from the Law No 213 of 30.12.2023 (s.c. Budget Law 2024) on the creation of real estate rights: by amending art. 9 § 5 and introducing the new art. 67 § 1 let. h) of Law Decree 917/1986, the capital gains generated on the transfer of any real estate rights of use (not only on the creation of the usufruct, as the law provided until now) are considered as taxable for personal income tax purposes.

In a nutshell, except for some minor cases, the exemption for personal income tax purposes on the incomes generated on the creation or transfer from other individuals of any real estate right of use has been cancelled.

In particular, under the Budget Law 2024 and the interpretation formerly provided by the Italian Tax Office in Ruling No 381/2023, for the transactions carried out from January the 1st 2024 onwards:

  • the deeds establishing real estate rights (use, usufruct, domicile, emphyteusis, surface rights and constrains) fall within the application of art. 67 § 1 let. h) of Law Decree 917/1986. Consequently:
  1. individuals must pay the personal income tax on the capital gains generated from the establishment of a real estate right,
  2. no exemption derives from the holding period of the underlying real estate property or right,
  3. it is not possible to opt for the substitutive tax of 26%;
  • the deeds of transfer for consideration of real estate rights (use, usufruct, domicile, emphyteusis, surface rights and constrains) before the fifth years of their creation, fall within the application of art. 67 § 1 let. b) of Law Decree 917/1986. Therefore:
  1. the capital gain generated on the transfer of real estate rights after the fifth year from their creation (extended to the tenth year for properties subject to renovation works eligible for the s.c. "superbonus 110% incentive") is fully exempt for personal income tax purposes;
  2. the taxable capital gain (if any) is calculated as the difference between: (i) the sales' proceeds cashed in a specific fiscal year and (ii) the purchase price or the creation price of the real estate right.
  3. Taxpayer can opt for the application of the substitutive tax of 26% as set forth by art. 1 § 496 of Law No 266/2005, which will be collected and remitted to the Tax Authorities by the Notary.

The new regime will mainly impact in a significant way on the renewable energies and agro-energies sectors, where the entrepreneurial decisions and business models will most likely be affected from the tax implications generated by the real estate properties' disposals rather than the creation of real estate rights (especially surface rights) on the same properties.

With particular reference to the surface rights, we point out that by the issuance of the Ruling no. 365/2023, recently published, the Italian Revenue Agency (hereinafter also "the IRA") released a new relevant opinion on the registration tax rate applicable to the deed of transfer of the surface right on agricultural land.

Opposite to the interpretation provided by the Italian Supreme Court in Ruling no. 3461 of February 11th 2021, the IRA has confirmed its previous opinion stated by the R.M. 22 June 2000, no. 92 and by the circular dated May 29th 2013, no. 18, i.e. the applicability of the registration tax with the rate of 15% instead of 9%.

The IRA's approach is based on an extremely formal interpretation of art. 1 of the Tariff, part I, attached to Presidential Decree 131/86, which identifies the rates applicable to "real estate transfer" deeds: according to the IRA, the equivalence between "real estate transfers" and "transfers or constitution of real estate rights" has general validity and, therefore, it is not limited to the first part of the Law. Consequently, all the rates provided for real estate transfers by art. 1 are also applicable to the deeds of establishment of real estate rights.

As a consequence of the above, the constitution of real estate rights, including surface rights, shall be considered included among the "transfers of agricultural land and related appurtenances in favor of subjects other than farmers and professional agricultural entrepreneurs", thus subject to a 15% registration tax rate.

The approach as above was first questioned by the Supreme Court with reference to the deeds of constitution of predial easements (Ruling. n. 16495/2003), due to the peculiar nature of these rights, and then contradicted with the recent Ruling. No 3461 of February the 11th 2021, in which the Supreme Court affirmed that the deeds of constitution of the surface rights cannot be considered as "transfers", and therefore should be subject to the 9% registration tax.

However, following the excursus on the evolution of art. 1 of the Tariff, part I, attached to Presidential Decree 131/86, the IRA states that a consistent interpretation of the Law implies the application of the same tax rate envisaged for the transfer of property also to the transfer/constitution of real estate rights.

For these reasons, the Tax Office rejects the interpretation of the Supreme Court Ruling No. 3461/2021, affirming that it could only be considered for predial easements and not to surface rights.

In conclusion, the deed of constitution of a thirty-year surface right on agricultural land is subject to the 15% registration tax rate applicable to a taxable base equal to the market value of the asset, with mortgage and cadastral taxes of 50 euros each on top.

Taxpayers are now facing a fiercer tax burden, if compared to the past, both from the owner's side and the assignee's side of real estate rights of use.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.