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Italy: Registration tax treatment of share deal vs. asset deal

Italy: Registration tax treatment

Italy’s Supreme Court referred to the Constitutional Court a question concerning the constitutionality of a provision of Italy’s registration tax law. At issue was the treatment of a share deal versus an asset deal and the respective treatment under article 20 of the registration tax law.


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The referring decision is: no. 23549 (23 September 2019)


The 2018 budget law clarified that registration tax must apply separately on each deed that is filed for registration—without considering any other deed executed immediately after and disregarding the economic ultimate effects achieved through all the executed deeds. As a result, step-transactions (the most typical one consisted of the contribution/demerger of a going concern into a new company (Newco), followed by the sale of shares in Newco, re-qualified by authorities as a straight sale of the going concern) could only be challenged on the basis of the general anti-abuse rules.

The 2019 budget law then specified that the clarification was to be intended to be effective retroactively, and therefore applicable also to deeds executed and registered before 1 January 2018. Based on this clarification, taxpayers that had initiated litigation were expected to obtain a taxpayer-favorable outcome in a court trial.

Before the Supreme Court was a challenge of the current version of article 20, with one argument being that this application would breach the (assumed) basic principle of “substance over form.” Hence, the matter has been referred to the Constitutional Court, but it is not certain when that could would issue a decision. 

KPMG observation

Article 20 continues to be effective and cannot be disregarded. Consequently, taxpayers need to consider their position with respect to any notice of assessment based on the pre-2018 budget law interpretation (such as is the assessment unlawful and would it be appropriate to contest it before a tax court).  If the Constitutional Court that upholds the law that was challenged with the result that the measure would be repealed with retroactive effect, this could have implications for cases for which the tax authorities’ review is barred under the statute of limitations or that have been decided by means of a final judgment by a court. Theoretically, the Constitutional Court could decide to grandfather certain transactions, as from January 2018, on the basis of the “legitimate expectation” principle (i.e., relying on the amended contents of the rule).

Read an October 2019 report [PDF 158 KB] prepared by the KPMG member firm in Italy

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