Tax Observatory › Direct taxes and returns › Contributing holding company shares to an Italian simple partnership: no controlled realisation, tax on normal value

Contributing holding company shares to an Italian simple partnership: no controlled realisation, tax on normal value

In ruling No 176 of 21 September 2026 the Italian Revenue Agency (Agenzia delle entrate) held that a contribution of the shares of a holding company to a simple partnership (società semplice) cannot benefit from the controlled realisation regime (realizzo controllato) under Article 177(2) of the Italian Income Tax Code (TUIR). A simple partnership is not required by law to draw up financial statements or to keep accounting records, so there is no book equity against which the realisation value can be measured. The contribution is valued at normal value and may give rise to an immediate taxable capital gain, even though the partners receive no cash.

A shareholder who contributes the shares of his or her holding company to a simple partnership cannot apply the controlled realisation regime: the contribution is treated as a disposal for consideration, and the consideration is the normal value of the shares contributed, under Article 9(2) and (5) of the Italian Income Tax Code (TUIR). This is the conclusion of ruling No 176 of 21 September 2026 (risposta a interpello). For individual partners who do not hold the shares as business assets, the practical consequence is this: the difference between normal value and the tax cost of the shares is a capital gain subject to the 26 per cent substitute tax. The tax is payable even though they receive only an interest in the simple partnership in exchange, and no cash at all.

The case examined

Two shareholders, holding 98 and 2 per cent respectively of a company whose main activity is acquiring and managing shareholdings, intended to reorganise the family’s assets by setting up a new simple partnership and contributing to it 100 per cent of the holding company’s shares. As a result of the contribution the simple partnership would have acquired legal control of the holding company, that is, the majority of votes at the ordinary shareholders’ meeting, under Article 2359(1)(1) of the Italian Civil Code.

The shareholders asked whether they could apply Article 177(2) TUIR and take as the realisation value the increase in equity that the simple partnership would have recorded as a result of the contribution. In their view the provision, as amended, refers in general terms to the “receiving company” (società conferitaria), without cross-referring to the categories of taxpayers in Article 73 TUIR, and would therefore also cover a simple partnership.

What Article 177(2) TUIR provides

The provision was amended by Article 17 of Legislative Decree No 192 of 13 December 2024, and the new wording applies to contributions made from 31 December 2024. It covers contributions of shares or quotas through which the receiving company acquires legal control of a company referred to in Article 73(1)(a) or (d) TUIR, that is, a resident company limited by shares or a non-resident company, or increases its controlling interest. In these cases the contributor’s realisation value is the portion of the receiving company’s equity items created as a result of the contribution.

This is not tax neutrality in the strict sense. As the Agency had already clarified in Circular No 33/E of 17 June 2010, it is a valuation rule: the contributor’s tax result depends on how the receiving company records the contribution in its financial statements. If the increase in equity equals the last tax value of the shares contributed, no capital gain arises; this is known as induced neutrality. It is this possibility that makes the regime a central tool in reorganising family shareholdings, as we explained in our article on contributing shareholdings to equity. The mechanism, however, presupposes financial statements of the receiving company, and that is precisely what, according to ruling No 176, a simple partnership lacks.

Alongside paragraph 2, paragraph 2-bis extends the regime, under certain conditions, to contributions that do not confer control: the shareholdings contributed must exceed certain thresholds of voting rights or capital, and the receiving company must be owned solely by the contributor or, where the contributor is an individual, by the contributor and his or her family members. Even then, however, the realisation value is determined under the paragraph 2 rule, so it is reasonable to assume that the ruling’s conclusion also holds for a contribution of qualified shareholdings (partecipazioni qualificate) to a simple partnership owned only by family members.

Why the simple partnership is excluded

The Agency acknowledges that the reform widened the scope of the provision. Under the previous wording the contributor had to receive shares or quotas in a resident company limited by shares, as clarified in Resolution No 43/E of 4 April 2017; the wording now in force requires only that the company whose shares are contributed be a company limited by shares, resident or not, and describes the receiving company simply as a “company”.

What has not changed, in the Agency’s view, is the method of calculation. The realisation value remains tied to the increase in the receiving company’s book equity, that is, to the outcome of its accounting records and of the statutory valuation rules for financial statements, which apply only to entities required by law to keep accounting records. A simple partnership is not so required:

• it may not carry on a commercial activity (Article 2249 of the Civil Code), and is therefore subject neither to the rules on annual financial statements in Articles 2423 et seq. nor to the obligation to keep accounting records under Article 2214;
• its managers are only required to account to the partners for their management (Article 2261(2)), and that account does not take the place of financial statements or of their valuation rules.

There is therefore no accounting framework capable of determining, objectively and with supporting evidence, the equity created as a result of the contribution. The applicants had proposed to determine it in that way in any event; the Agency based its refusal on the absence of a legal obligation, so that, following its reasoning, accounts kept on a voluntary basis would not appear to be enough. Hence the conclusion: the controlled realisation regime does not apply, and the contribution is valued at normal value under Article 9(2) and (5) TUIR read together.

Consequences for the partners

Article 9(5) treats contributions to companies and partnerships as disposals for consideration, and Article 9(2) deems the normal value of the assets contributed to be the consideration received. For an individual partner who does not hold the shares as business assets, the difference between that value and the tax cost of the shares, increased by related charges, is a capital gain under Articles 67 and 68 TUIR.

• The capital gain is subject to the 26 per cent substitute tax, for both qualified and non-qualified shareholdings: since 1 January 2019 the two categories have been taxed in the same way. In the case examined, the 98 per cent shareholder holds a qualified shareholding; the 2 per cent shareholder, unless his or her voting rights exceed 20 per cent, holds a non-qualified one, but the rate is the same.
• The capital gain is reported in section RT of the Redditi PF return (the individual income tax return) for the year of the contribution, and the tax is paid together with the income tax balancing payment.
• The practical problem is liquidity: the tax is paid in cash, while the partner receives only an interest in the simple partnership.

For unlisted shares, Article 9 refers to the company’s equity to determine normal value; whether this means book equity pro rata or an economic value estimated by an expert is not specified in the ruling, and needs to be settled case by case before the transaction.

Two options to consider before contributing

The first is the step-up of the tax cost of the shares (rideterminazione) under Article 5 of Law No 448 of 28 December 2001, which has become a permanent regime following Article 1(30) of Law No 207 of 30 December 2024. Anyone holding the shares on 1 January may adopt as their tax cost the value at that date shown in a sworn valuation report. To do so, they must pay a substitute tax by 30 November of the same year; from 2026 the rate is 21 per cent (Article 1(144) of Law No 199 of 30 December 2025). The tax may also be paid in up to three equal annual instalments, with annual interest at 3 per cent on the instalments after the first. For shares held on 1 January 2026, the valuation report must be sworn, and the tax or the first instalment paid, by Monday 30 November 2026. Whether it is worthwhile must be calculated: 21 per cent applies to the entire appraised value, 26 per cent only to the capital gain. As a first approximation, and assuming that normal value at the time of the contribution equals the appraised value, the step-up pays off when the tax cost of the shares is less than about 19 per cent of the appraised value; the cost of the valuation report must also be factored in. Timing also matters: if at the time of the contribution normal value exceeds the appraised value, the difference remains taxable; if it is lower, the shortfall does not give rise to a usable capital loss.

The second is to choose a different receiving company. If the receiving company is a company limited by shares, required to draw up financial statements, the Article 177(2) regime remains available, subject to the statutory conditions, and the increase in equity can be measured. In 2026 the Agency also accepted the regime for a contribution to reserves without a capital increase, where the contributors already hold the entire capital of the receiving company in the same proportions as they hold the company whose shares are contributed (ruling No 9 of 20 January and ruling No 161 of 13 August 2026). A company limited by shares costs more in terms of compliance; in return, its shareholders are not personally liable for the company’s obligations, whereas partners in a simple partnership generally are (Article 2267 of the Civil Code). Choices concerning the family holding company must also be weighed from the standpoint of abuse of law.

The simple partnership remains transparent for dividends

Even where the tax on the contribution is paid, a simple partnership does not allow the holding company’s profits to be retained free of tax. Article 32-quater of Decree-Law No 124 of 26 October 2019 provides that dividends paid to a simple partnership are deemed to be received by its partners on a look-through basis: for resident individual partners who do not hold the interest as business assets, the 26 per cent final withholding tax applies, as if they received the dividends directly; for sole traders and commercial partnerships as partners, 41.86 per cent of the dividends is excluded from taxable income; for companies limited by shares as partners, 95 per cent is excluded.

In addition, a simple partnership may hold shareholdings only for the purpose of enjoying their returns: if it carried on active management, such as directing and coordinating its subsidiaries, financing them or trading in shareholdings, it would risk being treated as a commercial partnership, with different civil-law and tax consequences.

Points of caution

• The ruling binds the Agency only in respect of the applicants and for the case described; it does, however, clearly indicate the approach the tax offices will follow.
• The ruling does not say whether the same reasoning applies to a general partnership (società in nome collettivo) or a limited partnership (società in accomandita semplice). Unlike a simple partnership, these partnerships, if they carry on a commercial activity, keep accounting records and draw up financial statements under Article 2217 of the Civil Code, applying the valuation rules for joint-stock companies (società per azioni) so far as applicable, without being subject to the full rules in Articles 2423 et seq. There is no administrative guidance on this point.
• As to the requirement that the contributor receive shares or quotas of the receiving company, ruling No 176 merely notes that the amended wording no longer refers to shareholdings “received”; rulings Nos 9 and 161, by contrast, state that even after the reform the regime continues, as a general rule, to presuppose such receipt, save for substantially equivalent situations.
• The Agency reserves its power to challenge abuse of law under Article 10-bis of Law No 212 of 27 July 2000 (the Taxpayers’ Bill of Rights); the text of the ruling mistakenly gives the year of the law as 2020.
• From 1 January 2027 the 1986 Income Tax Code and the other provisions referred to here on the taxation of capital gains, the step-up of the cost of shares and dividends paid to simple partnerships are incorporated into the new consolidated income tax code (Legislative Decree No 117 of 19 June 2026); until 31 December 2026 the current provisions apply.

In practice

• Before contributing shareholdings to a simple partnership, calculate the capital gain that would arise at normal value and the resulting 26 per cent tax, and check how it will be funded.
• If the shares were held on 1 January 2026, consider stepping up their cost with a sworn valuation report and payment of the 21 per cent tax by 30 November 2026.
• Compare the simple partnership with a receiving company limited by shares, to which the controlled realisation regime remains available.
• Bear in mind that a contribution of quotas in an Italian limited liability company (s.r.l.) requires a deed with authenticated signatures and filing with the companies register within thirty days (Article 2470 of the Civil Code).
• Document the non-tax reasons for the reorganisation (governance, generational transfer, stability of management) and keep valuation reports and resolutions.
• For transactions already being planned, review the structure in the light of the ruling before the deed is signed.

Frequently asked questions

Does the normal value of the shares contributed coincide with the holding company’s equity?

For unlisted shares, Article 9(4)(b) TUIR refers to the company’s equity. Ruling No 176 does not specify whether book equity pro rata or an estimated economic value should be used: before the transaction it is prudent to obtain a documented valuation.

Can I avoid the capital gain by contributing the shares to an s.r.l. instead of a simple partnership?

If the s.r.l. acquires legal control of the holding company or increases its controlling interest, Article 177(2) applies: the realisation value is the increase in equity that the s.r.l. records in its financial statements, and if it equals the tax cost of the shares no capital gain arises. The company’s running costs and anti-abuse aspects still need to be assessed.

I have already contributed my shares to a simple partnership: what should I do?

If the contribution took place in 2026, the capital gain must be reported in section RT of the Redditi PF 2027 return and the 26 per cent substitute tax paid together with the income tax balancing payment: it is advisable to set aside the necessary funds now. If the contribution took place in 2025 and the Redditi PF 2026 return was filed without the capital gain, a corrected return can be filed by the filing deadline of Monday 2 November 2026; after that date a supplementary return is needed. Whether a corrected or a supplementary return is filed, the unpaid tax is regularised through voluntary correction (ravvedimento operoso), paying tax, interest and a reduced penalty. Voluntary correction is no longer available once a payment demand (atto di liquidazione) or a notice of assessment has been served, or once the taxpayer has been notified of the outcome of the automated or formal checks of the return (commonly known as the avviso bonario).

Sources

Articles 5, 9(2), (4) and (5), 67(1)(c) and (c-bis), 68, 73 and 177(2) and (2-bis) of the Income Tax Code (TUIR), approved by Presidential Decree No 917 of 22 December 1986.

Article 17 of Legislative Decree No 192 of 13 December 2024; Article 9 of Legislative Decree No 148 of 7 August 2026, which replaced the second sentence of Article 177(2) TUIR on contributions of shareholdings with a built-in loss.

Article 5 of Law No 448 of 28 December 2001, as amended by Article 1(30) of Law No 207 of 30 December 2024 and by Article 1(144) of Law No 199 of 30 December 2025.

Article 5 of Legislative Decree No 461 of 21 November 1997; Article 3 of Decree-Law No 66 of 24 April 2014; Article 1(999) et seq. of Law No 205 of 27 December 2017.

Article 32-quater of Decree-Law No 124 of 26 October 2019, converted into law by Law No 157 of 19 December 2019.

Article 10-bis of Law No 212 of 27 July 2000.

Article 13(1) and (1-ter) of Legislative Decree No 472 of 18 December 1997; Article 2 of Presidential Decree No 322 of 22 July 1998; Article 7(1)(h) of Decree-Law No 70 of 13 May 2011.

Articles 2214, 2217, 2249, 2261, 2267, 2359, 2423 et seq. and 2470 of the Civil Code.

Legislative Decree No 117 of 19 June 2026.

Agenzia delle entrate: rulings No 9 of 20 January 2026, No 161 of 13 August 2026 and No 176 of 21 September 2026; Circular No 33/E of 17 June 2010; Resolution No 43/E of 4 April 2017; instructions for the Redditi PF 2026 return.