Marzo 15, 2020
The Italian Tax Authorities have recently published some interesting responses in tax rulings concerning the international reorganization operations.
In one of these, the situation of a group with a parent company and a sub-holding company both resident in France and three operating companies resident in Italy was examined.
The operation analyzed consisted of the merger in France of the sub-holding 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 our case the operation took place between two companies both resident in France.
The Tax Authorities have concluded that this operation is not abusive and can be considered neutral according to the domestic tax legislation as the following conditions are 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 the Italian law;
- the operation produces effects in Italy on the tax position of at least one of the parties involved.
As far as the condition that the operation produces effects in Italy on the position of at least one of the parties involved is concerned, 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%.
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