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Step-Up in Basis for Companies Transferred to Italy

By Dr Sergio Finulli, COMMA 10

Italy has recently adjusted the tax legislation for companies which transfer their headquarters from Italy to a foreign country (exit tax) and for foreign companies which move to Italy.

The two pieces of legislation have been harmonised and at the date of transfer – to which a specific reference is made in the OECD guidelines on transfer pricing – the tax value of their assets and liabilities coincides with the market value for both the exit tax and in the case of companies which move to Italy.

In particular, in the case of moving to Italy, the new legislation applies if the company’s country of origin is a European Union (EU) member state or a European Economic Area (EEA) member state or is one of the states which permit an adequate exchange of information. It should also be pointed out that the new legislation also clarifies that the market value also applies to transfers to Italy of assets and liabilities which arise from extraordinary international transactions: for example, mergers, de-mergers, or contributions.

The new legislation does not require a continuity of the values with the historical costs or costs previously recognised for tax purposes or that there has been a previous subjection to exit tax in the country of origin; the measurement of assets and liabilities at market prices at the time of their transfer to Italy is still envisaged. Therefore, assets which have been fully amortised/depreciated at the time of transfer to Italy are measured at the market value and can enable the amortisation/depreciation amounts to be deducted in subsequent years, also for tax purposes.

This also means that the conditions foreseen in the previous interpretation no longer apply; the previous interpretation envisaged that the fair value would only apply to assets for which the company had incurred a cost in the country of origin. Therefore, in the case where the transferred assets included goodwill, the goodwill in question is to be valued in Italy at the market value, even if it does not result from a purchase.

If the goodwill included in the transferred assets was generated internally, its value for tax purposes, however, will be valued at the market value. Goodwill valued in this way at the time of transfer in Italy may then be amortised in the following years and the annual amortisation amounts will represent tax-deductible costs.

Dr Sergio Finulli

Dr Sergio Finulli

GGI member firm
COMMA 10 Chartered Accountants & Lawyers
Advisory, Auditing & Accounting, Corporate Finance, Tax
Milan, Italy
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COMMA 10 is a firm built on the cornerstone of professional collaboration between chartered accountants and lawyers. The firm provides its clients with comprehensive accounting, corporate and tax services, as well as legal support, corporate restructuring, and bankruptcy services in multiple industries. COMMA 10 is based in Milan and provides integrated services to individuals and private and public companies, as well as non-profit organisations.

Dr Sergio Finulli is a Founding Partner of COMMA 10, a GGI member since 1997. He is a chartered accountant and legal auditor, and currently Regional Vice Chairperson Europe of the GGI International Taxation Practice Group (ITPG).

Published: International Taxation Newsletter, No. 12, Spring 2020 l Photo: Ivan Kurmyshov -

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