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The Tax Authority censures, for ethical purposes, outgoing shareholder reinvestment of in the context of an MLBO transaction

February 7, 2024

In response to advance tax ruling no. 22/2024, the Tax Authority confirms the previous position taken with legal principle no. 1 of 2019, whereby it deemed that the reinvestment made by the outgoing shareholders, in the absence of offsetting by the credit accrued from the transfer of the shareholdings, constitutes an undue use of the ACE benefit censurable pursuant to Article 10-bis of Law no. 212/2000, given (i) the circularity of the transaction i.e. its inability to produce appreciable economic effects beyond obtaining an undue tax advantage and (ii) the failure of the outgoing shareholders to introduce new financial resources into the company, but the mere circularity of the cash flow.

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New PVC – Digital Signature for Subscription

On 30 September 2024, pursuant to article 38-bis, paragraph 2 of Presidential Decree 600/73, provision no. 372380 of the Tax Revenue Agency was published, clarifying the procedures for signing tax audit reports issued at the conclusion of administrative tax control activities by the members of the Tax Revenue Agency.

Amendments to the Cooperative Compliance Regime

Upon the introduction of Legislative Decree 108/2024 – Official Gazette no. 182 on 5 August 2024, amendments to Legislative Decree 128/2015 were passed which integrated the provisions of the cooperative compliance regime (a recent topic of discussion from 15 July 2024).

The Biennial Preventive Agreement (BPA)

Legislative Decree no. 13 from 12 February 2024, with the aim of reinforcing cooperative compliance institutions, has established the Biennial Preventive Agreement (BPA) through which, upon the reaching of an agreement between the Italian Tax Agency and an individual tax payer, the latter shall be able to determine, for a two-year period, the income which derives from the exercise of its business or from that of trade and business-related to income tax and IRAP (regional tax on productive activities) purposes. The new institution does not, however, impact current VAT regulations.

Cooperative Compliance Regime

Legislative decree no. 128/2015 signed into legislation the Cooperative Compliance Regime with the aim of promoting stronger forms of communication and cooperation between the Italian Tax Authorities and taxpayers whose framework includes systems for detection, measurement, management and control of tax risks and exposure.

Penalty system reform – Council of Ministers, 24 May 2024 – News related to Voluntary Correction of Errors procedure and Cumulative Judgment

The Council of Ministers’ meeting on 24 May 2024 definitively approved the text of the implementing decree of tax delegation containing penalty system reform.

Judgement No. 2403/17/2024 of the Tax Court of Second Instance of Lazio – immediate implementation of the judgment of the European Court of Justice in Case C-341/22

The Tax Court of Second Instance of Lazio in Judgment No. 2403/17/2024, immediately applying the findings of the European Court of Justice in Case C-341/22 of March 7, recognized the right to a VAT refund of a company with a systematic loss, disapplying art. 30 of Law No. 724/1994.

The demerger by demerger split as a worthwhile alternative to the transformation of a permanent business establishment in Italy into a subsidiary

As already discussed in a previous article (ed. March 5, 2024), with the introduction of Article 2506.1 into the Civil Code, a new form of partial corporate split-up known as demerger by demerger split has been included in our legal system, through which the demerged company assigns part of its assets to one or more newly established companies (or even for the benefit of pre-existing companies, as provided by Bill No. 209 of November 7, 2023 of the Milan Notary Council) receiving in exchange shares or quotas of said company.

New tax credit for investments upon implementation of the transition 5.0 plan

Art. 38 of the PNRR Decree (Decree-Law 19/2024) introduced the new 5.0 tax credit for investments made in 2024 and 2025 in assets allowing for energy savings beyond certain percentage limits, to be recognised to an increasing extent according to the level of consumption reduction achieved.

Demerger by demerger split – similarities and differences to traditional demergers and contribution in kind

Article 51 of Legislative Decree No. 19/2023 added Article 2506.1 to the Italian Civil Code, which introduced a new version of the demerger into the Italian legal system, called demerger by demerger split, through which the demerged company assigns part of its assets to one or more newly incorporated companies (or also to existing companies, as provided for by the Milan Notary Council's Maximum No. 209 of 7 November 2023) receiving shares or quotas of the same, continuing its business.

The Tax Authority censures, for ethical purposes, outgoing shareholder reinvestment of in the context of an MLBO transaction

In response to advance tax ruling no. 22/2024, the Tax Authority confirms the previous position taken with legal principle no. 1 of 2019, whereby it deemed that the reinvestment made by the outgoing shareholders, in the absence of offsetting by the credit accrued from the transfer of the shareholdings, constitutes an undue use of the ACE benefit censurable pursuant to Article 10-bis of Law no. 212/2000, given (i) the circularity of the transaction i.e. its inability to produce appreciable economic effects beyond obtaining an undue tax advantage and (ii) the failure of the outgoing shareholders to introduce new financial resources into the company, but the mere circularity of the cash flow.
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New PVC – Digital Signature for Subscription

Amendments to the Cooperative Compliance Regime

The Biennial Preventive Agreement (BPA)

Cooperative Compliance Regime

Penalty system reform – Council of Ministers, 24 May 2024 – News related to Voluntary Correction of Errors procedure and Cumulative Judgment

Judgement No. 2403/17/2024 of the Tax Court of Second Instance of Lazio – immediate implementation of the judgment of the European Court of Justice in Case C-341/22