Italy's Budget Law: tax regime for miscellaneous income extended to all rights in rem

The amendment to article 67(1)(h) of the Consolidated Income Tax Law (TUIR) - introduced by the Budget Law 2024 - provides that not only income from usufruct (a temporary right to use and derive income or benefit from another's property), but also income from the establishment of other rights in rem (proprietary rights), is to be considered miscellaneous income.

The impact on surface rights might also affect the photovoltaic market.
 

Miscellaneous income: what does it include?

Paragraph 92 of article 1 of Law no. 213 of 30 December 2023 (Budget Law) amended the text of article 67(h) of the TUIR, broadening the list of income falling under the category of miscellaneous income.

Miscellaneous income now includes income derived from:

• the grant in usufruct;
• the subleasing of real estate;
• rental;
• property leases;
• rental or leasing of vehicles;
• machines and other movable property;
• the lease and usufruct of businesses and, as a result of the amendment, now also includes income from the constitution of other rights in rem (emphyteusis, or long-term ground leases, surface rights, use, easements).
   

Miscellaneous income and surface rights

The situation most significantly impacted by this new legal provision relates to surface rights.

Subparagraph (h) of article 67(1) of the TUIR, now amended and extended, provides that the consideration for the surface right, received by the landowner, may give rise to a taxable capital gain, which may be taxed up to 43% depending on the seller's IRPEF (personal income tax) tax bracket and regardless of the time elapsed between the purchase of the land and the transfer of the surface right.

Until the entry into force of the new legislation, the most authoritative doctrine equated, for direct tax purposes, the constitution of surface rights with the sale of real estate held by natural persons (see Rule of conduct n. 183 of 1.3.2012 issued by the Associazione Italiana Dottori Commercialisti, sezione Milano).

Surface rights and taxable capital gain

The taxable capital gain arising from different rights is realised when payment of the consideration takes place, thus following the cash principle.

The taxable capital gain arising from different rights concerns natural persons; in fact, the amendment to the article:

• does not affect capital gains arising from the operation of enterprises engaged in agricultural activities;
• will result in a heavier tax impact for landowners who are natural persons who grant surface rights in favour of third parties.
   

Capital gains only affect natural persons

 

Considerations and critical issues

With regard to land of particular interest for the construction of photovoltaic plants, a very topical issue, the risk cannot be excluded that in the conclusion of new contracts, involving the establishment of surface rights on land owned by natural persons, a higher rental fee may be charged in order to offset the negative effect of higher taxation on the landlords.

Increased taxation for landowners (natural persons) when concluding surface contracts for the construction of photovoltaic plants