Ruling No. 194/2026
Subject: Award of shares to employees where a minimum length-of-service requirement applies and employees at the top executive levels are excluded – Article 51(2)(g) of the TUIR
With Ruling No. 194/2026, the Italian Revenue Agency (Agenzia delle Entrate) clarified that a free share award plan can still be regarded as open to employees generally, and therefore benefit from the tax exemption provided for by Article 51(2)(g) of the TUIR, even when access is subject to a minimum seniority requirement and employees at the top executive levels are excluded.
What matters are the criteria adopted, which must be objective and non-discriminatory, and that the plan does not grant ad personam advantages to specific, individually identified workers.
1. The case
The case concerns an Italian company belonging to an international group that intends to involve its employees in the company’s results through a free share award plan.
The plan provides for the annual award of the same number of shares to all employees who meet certain requirements, with no distinctions based on category, duties, company level or individual performance.
In particular, employees with at least three years of service, who have not tendered their resignation and who do not belong to the Group’s top executive levels may join the plan. The latter, a very small share of the workforce, are already recipients of different incentive plans.
The company therefore asks whether these limitations are compatible with the requirement of “employees generally” laid down by the rules for the favourable tax regime to apply.
2. The tax regime for shares awarded to employees
Article 51(2)(g) of the TUIR provides that the value of shares offered to employees generally does not form part of employment income up to an overall limit of EUR 2,065.83 per tax period.
To benefit from the relief, three conditions in particular must be met:
- the shares must be offered to employees generally;
- the relieved value may not exceed EUR 2,065.83 in total per tax period; any excess becomes taxable;
- the shares must be held for at least three years from their award and may not be repurchased by the issuing company or by the employer before that time.
If the shares are sold before the three years have elapsed, the amount previously excluded from income is taxed in the tax period in which the sale takes place.
From 1 January 2027, these provisions will be moved to Article 53 of the new Consolidated Act on income tax legislation, approved by Legislative Decree No. 117 of 19 June 2026.
3. What is meant by “employees generally”
The requirement of employees generally is intended to prevent the favourable regime from being used to grant tax-advantaged remuneration only to individually selected workers.
As already clarified by the Italian Revenue Agency in Resolution No. 129/E of 12 October 2004 and, more recently, in Ruling No. 147 of 4 June 2025, the relief may apply where the plan is open to employees generally or to categories of employees, provided that it does not give rise to ad personam advantages.
The concept of “category” should not be understood solely by reference to the traditional categories of civil law, such as executives, middle managers, office staff and manual workers, but may also include homogeneous groups of workers identified on the basis of objective criteria.
The decisive element is therefore that the selection of beneficiaries is not aimed at favouring specific, individually identified employees, but follows general criteria consistent with the purposes of the plan.
4. Minimum seniority and exclusion of top executives
In the case examined, the Agency considers that the requirement of at least three years of service does not create unequal treatment incompatible with the favourable regime.
The condition is in fact intended to ensure that the worker is genuinely integrated into the company and that the employee has contributed, at least for a certain period, to the development of the business.
Once the requirement has been met, the shares are awarded in equal quantities to all eligible employees, regardless of role, duties, company level and seniority accrued beyond the minimum threshold.
The exclusion of employees at the top executive levels also does not undermine, in this specific case, the requirement of generality. It involves an extremely small share of the workforce, around 0.35% of the Group’s employees, who are already recipients of specific, different incentive plans.
The exclusion therefore responds to the need to avoid duplicating incentive systems and does not appear aimed at granting the tax benefit only to individually selected workers.
5. The clarification of the Italian Revenue Agency
The Agency concludes that, based on the characteristics presented by the company, the plan can be regarded as open to employees generally or to categories of employees for the purposes of applying Article 51(2)(g) of the TUIR.
The presence of a minimum seniority requirement and the exclusion of a limited number of top executives therefore do not, in themselves, prevent the favourable regime from applying.
In the case analysed, particular weight is given to the broad scope of the beneficiaries, the award of the same number of shares to all eligible employees and the absence of differences based on role, duties, level or individual performance.
It remains the case that, to benefit from tax exemption up to EUR 2,065.83 per year, all the further conditions laid down by the rules must also be met, including the minimum holding period for the shares.