Turin, Ttaly

International mergers and Italian anti-abuse regulations

By Roberto M. Cagnazzo, Three & Partners

The Italian tax authorities have recently published some interesting responses in tax rulings concerning international reorganisation operations. In one of these rulings, the situation was examined of a group with a parent company and a sub-holding company both resident in France, and three operating companies resident in Italy.

The operation analysed consisted of the merger in France of the subholding company into the parent company, following which the parent company became the direct owner of the shareholdings in the three Italian operating companies.

The merger in question cannot be considered a neutral intra-EU merger as this regime requires the operation to be carried out between two parties resident in different EU countries, whereas in this case the operation took place between two companies both resident in France.

The tax authorities concluded that this operation is not abusive and can be considered neutral according to Italian domestic tax legislation as the following conditions were simultaneously met:

  • the transaction qualifies as a merger within the meaning of the Italian Civil Code;
  • the parties involved have a legal form comparable to that provided for companies under Italian law; and
  • the operation produces effects in Italy on the tax position of at least one of the parties involved.

With respect to the condition that the operation concerned produce effects in Italy on the position of at least one of the involved parties, in this example, it has been held to exist, since, with the merger of the sub-holding company into the parent company, a transfer of three shareholdings is carried out which, if not carried out in a neutral manner, would also be subject to taxation in Italy by virtue of article 8 of the protocol to the Italy-France Convention which assigns to the state of residence of the transferred company (Italy) the power to tax capital gains for shareholdings exceeding 25%.


Roberto M. Cagnazzo

Roberto M. Cagnazzo

GGI member firm
Three & Partners
Auditing & Accounting, Corporate Finance, Tax
Torino, Italy
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Three & Partners is a boutique firm based in Turin and deep-rooted in the North West of Italy but with a clear European identity and a strong international vocation. The firm provides integrated tax, corporate, legal, and business advice and assistance all over Italy on a wide range of domestic, European, and international matters.

Roberto M. Cagnazzo, Founder and Partner, is a chartered accountant and statutory auditor with a considerable experience in domestic and international taxation acquired as Head of Tax in some of the leading Italian multinational groups and as Professor of Comparative Tax Systems and of Tax Law at the University of Turin.


Published: International Taxation Newsletter, No. 16, Spring 2022 l Photo: fabio lamanna - stock.adobe.com

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