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.