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Italy: Tax rulings, court decision address tax issues in M&As

Italy: Tax rulings, court decision address tax in M&As

Recent guidance and court cases offer some clarification regarding merger and acquisition (M&A) transactions.


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The Italian Revenue Agency (Agenzia delle Entrate) issued tax rulings that:

  • Describe the conditions under which a start-up phase may be deemed to be an active business for purposes of the participation exemption regime
  • Concern the application of the general anti-avoidance rule in three instances with respect to demergers in two situations and a contribution followed by a demerger in another case
  • Conclude a “partial and proportional demerger” that results in the transfer of a real estate business from one company to another existing company, both companies having the same four individual resident shareholders, is not abusive
  • Clarify that a contribution of shares followed by a demerger of the beneficiary is an “abusive transaction” (the company was owned by four individual brothers, and the goal was to split the business among the four individuals, to allow each to manage his own company independently)

The Supreme Court issued a judgment (no. 21824 of 7 September 2018) concluding that a merger leverage buyout (e.g., one company purchases another and subsequently merges with it) was not abusive.


Read an October 2018 report [PDF 180 KB] prepared by the KPMG member firm in Italy

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