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Family holdings, contributions and hive-downs after the tax reform

Contributing shares to the family holding, demerger by hive-down, contribution of a business: what is tax-neutral and where the risk of abuse remains.

Following the reform, more reorganisations than before can be carried out without paying income taxes at the time of the transaction: for example, the contribution of a qualifying minority shareholding to the family holding company and the scissione mediante scorporo (demerger by hive-down). In return, the law imposes certain restrictions, such as a 60-month holding period before an exempt sale, and transactions carried out essentially to save taxes remain open to challenge as an abuse of law.

The framework

The rules of the TUIR (Testo unico delle imposte sui redditi, Consolidated Income Tax Act) on extraordinary transactions were revised by Legislative Decree no. 192 of 13 December 2024 (Official Gazette no. 294 of 16 December 2024, in force from 31 December 2024), as amended by Decree-Law no. 84 of 17 June 2025 (converted by Law 108/2025), by Legislative Decree no. 192 of 18 December 2025 and by Legislative Decree no. 148 of 7 August 2026 (Article 9).

Contribution of shareholdings (Article 177 TUIR). The “realizzo controllato” (controlled realisation) rule applies: the contributor realises a value equal to the increase in net equity recorded by the receiving company. The criterion applies even if the increase is lower than the tax basis of the shareholding; if, however, it is also lower than the fair market value, the lower of tax basis and fair market value is realised (paragraph 2, as amended by Legislative Decree 148/2026 for contributions from 2026, with effect also for previous years, from 31 December 2024, if the returns were prepared accordingly). The regime applies where the receiving company acquires or strengthens control (paragraph 2) and also to qualifying minority holdings, i.e., in unlisted companies, more than 20% of the voting rights or more than 25% of the capital (paragraph 2-bis). For the latter, a receiving company owned solely by the contributor used to be required; for contributions from 31 December 2024 (Article 17, paragraph 2, of Legislative Decree 192/2024), where the contributor is an individual, his or her family members may also be shareholders: spouse, relatives up to the third degree and relatives by marriage up to the second degree (Article 5, paragraph 5). If the shareholding contributed is in a holding company, the thresholds are measured at the level of the subsidiaries (paragraph 2-ter, as interpreted by Article 5 of Legislative Decree 192/2025). Paragraph 2-quater imposes a condition: the receiving company benefits from the exemption on capital gains (Article 87) only after a 60-month holding period.

Demerger by hive-down (Article 2506.1 of the Civil Code; Article 173, paragraphs 15-ter and 15-ter.1, TUIR). The company transfers part of its assets to a beneficiary company and itself receives the shares. With a newly incorporated beneficiary (paragraph 15-ter) the transaction is tax-neutral: the demerged company takes as tax basis of the shares the net tax value of what it has hived down, and the beneficiary inherits tax values and holding period. This applies to demergers from the tax period in progress on 31 December 2024. With an existing beneficiary the hive-down remains tax-neutral, but the ordinary rules of Article 173 apply without paragraphs 3, 7 and 9; if assets other than a business or shareholdings meeting the requirements of Article 87, paragraph 1, letters c) and d) are hived down, for example a property, the exemption on the shares received requires them to have been held at least since the beginning of the third tax period preceding the sale (paragraph 15-ter.1, added by Legislative Decree 192/2025, with effect from demergers in the tax period in progress on 31 December 2024). Hiving down a business and then selling the shareholding received is not abusive (paragraph 15-quater).

Contribution of a business (Article 176 TUIR). It remains tax-neutral. For transactions from 1 January 2024, the higher values recorded on the tangible and intangible fixed assets of the business received may be stepped up for tax purposes, in whole or in part, by paying a substitute tax of 18% (income taxes) and 3% (IRAP, the regional tax on productive activities), paid in a single instalment together with the balance of taxes; if the assets are sold before the third tax period following that of the election, the step-up lapses and the substitute tax is credited against taxes (paragraph 2-ter). For contributions from the tax period in progress on 31 December 2024 (Decree-Law 84/2025), the losses of the receiving company are subject to the same limits as in a demerger (paragraph 5-bis, which refers to Article 173, paragraph 10).

Transformation (Article 170 TUIR). It remains tax-neutral. If an srl (società a responsabilità limitata, limited liability company) becomes a partnership, the reserves formed before the transformation, excluding capital reserves (Article 47, paragraph 5), are attributed to the partners when they are distributed or used for purposes other than covering losses, provided that after the transformation they are recorded in the balance sheet with an indication of their origin; otherwise, in the tax period following the transformation (paragraph 4). Attribution to the partners follows Article 5, in proportion to their shares (paragraph 4), but taxation is that of a distribution of reserves by a corporation, i.e. of dividends (paragraph 5).

Abuse of law (Article 10-bis of Law 212/2000). A transaction lacking economic substance that essentially produces undue tax advantages is abusive; a transaction supported by sound, non-marginal non-tax reasons, including organisational or managerial reasons, is not (paragraph 3). The tax authorities must prove the abusive conduct, the taxpayer the non-tax reasons (paragraph 9).

What changes in concrete terms

Two brothers each own 50% of a manufacturing srl. The tax basis of each shareholding is 50,000 euro, and the estimated value of the company is 3,000,000 euro. Each wants his own holding company with his children, to prepare for generational succession.

Each contributes his shareholding to a new holding company whose shareholders are himself and his children. A 50% stake does not confer control, which requires a majority of the votes, but exceeds the 25% threshold: paragraph 2-bis applies. If the holding company increases its net equity by 50,000 euro, the realisation value is 50,000 and the capital gain is zero. If, at the time of the contribution, a cousin, a fourth-degree relative, were among the shareholders of the holding company, the regime would not apply: the contribution would be treated as a realisation at fair market value (Article 9, paragraphs 2 and 4, letter b), i.e. in proportion to the company’s net equity), which we assume here to be 1,500,000 euro, with a capital gain of 1,450,000 and a 26% substitute tax of 377,000 euro. The entry of an unrelated shareholder after the contribution is not expressly regulated and must be assessed separately, including from the standpoint of abuse.

Returning to the case with a zero capital gain, if the holding company sells the shareholding after three years the exemption does not apply, and the capital gain of 1,450,000 euro is subject to IRES (corporate income tax) at 24%: 348,000 euro. After 60 months, with the other requirements of Article 87, 5% is taxable: 72,500 euro, i.e. 17,400 euro of IRES.

In practice

• Before the transaction: a map of shareholders with voting and capital percentages, tax basis and family members who will join the holding company.
• A contribution to an srl requires a valuation report by a statutory auditor or an audit firm (Article 2465 of the Civil Code; for an spa, a joint-stock company, the rules of Article 2343 of the Civil Code apply). The increase in the receiving company’s net equity is set in the notarial deed: the capital gain depends on it.
• Demergers and hive-downs: plan (Article 2506-bis of the Civil Code), resolutions, deed; tax values are fixed at the effective date (Article 2506-quater of the Civil Code).
• Income tax return for the year: reconciliation statement for the contribution of a business and any election for the substitute tax, to be paid with the balance.
• If the business or business unit contributed or hived down has employees, the employment relationships pass to the receiving or beneficiary company with the rights accrued, including the TFR (trattamento di fine rapporto, statutory severance pay); for the claims that the employees had at the time of the transfer, the two companies are jointly and severally liable, unless the employee releases the transferor through the procedures of Articles 410 and 411 of the Code of Civil Procedure (Article 2112, paragraphs 1 and 2, of the Civil Code). If the total workforce exceeds fifteen, the transferor and the transferee send written notice to the workplace union representatives and to the sector trade unions at least twenty-five days before the deed, or before the binding agreement if earlier. If, within seven days, the representatives or the unions request a joint examination in writing, it must begin within the following seven days and is closed after ten days even without agreement. Failure to comply with these obligations constitutes anti-union conduct (Article 47, paragraphs 1, 2 and 3, of Law no. 428 of 29 December 1990). The mandatory employment notifications are then filed and the INPS (social security) and INAIL (workplace accident insurance) positions are updated. The contribution of shareholdings and the transformation do not change the employer. In the transformation of an srl into a partnership, however, the position of the partners who work in the company must be reviewed: enrolment in the INPS scheme for craftsmen or traders and compatibility with an employment relationship.
• Where there is doubt as to abuse, submit an interpello (advance ruling request) before acting (Article 11, paragraph 1, letter c, of Law 212/2000).
• Documents to keep: valuation report, minutes setting out the reasons for the transaction, calendar of the 60 months.

Mistakes to avoid

• Adding together the shareholdings of several family members to reach the threshold: as a precaution, each shareholding contributed should exceed it on its own.
• Selling from the holding company before 60 months while counting on the exemption.
• Assuming that the contribution of a business preserves the receiving company’s losses: the limits of paragraph 5-bis apply.
• Believing that the exclusion of abuse covers every hive-down followed by a sale: the law provides for it in the case of a business; for individual assets, such as a property, Article 10-bis applies: the organisational reasons must be documented beforehand and, if the beneficiary already existed, the exemption on the shares requires them to have been held at least since the beginning of the third tax period preceding the sale (Article 173, paragraph 15-ter.1).

References

Presidential Decree (d.P.R.) no. 917 of 22 December 1986, Articles 5, paragraph 5

9, paragraphs 2 and 4

47, paragraph 5

87

170, paragraphs 4 and 5

173, paragraphs 10, 15-ter, 15-ter.1 and 15-quater

176, paragraphs 2-ter and 5-bis

177, paragraphs 2 to 2-quater

Articles 2112, 2343, 2465, 2506.1, 2506-bis and 2506-quater of the Civil Code

Articles 410 and 411 of the Code of Civil Procedure

Law no. 428 of 29 December 1990, Article 47, paragraphs 1, 2 and 3

Law no. 212 of 27 July 2000, Articles 10-bis and 11

Legislative Decree no. 192 of 13 December 2024

Decree-Law no. 84 of 17 June 2025, converted by Law 108/2025

Legislative Decree no. 192 of 18 December 2025

Legislative Decree no. 148 of 7 August 2026, Article 9

Legislative Decree no. 117 of 19 June 2026, Articles 376 and 377