The Italian Tax Revenue Agency, in response to question no. 200 of 11 October 2024, considered a series of extraordinary transactions consisting of two induced neutrality transfers (pursuant to art. 177 co. 2 and 2-bis of the TUIR, Italy’s Consolidated Law on Income Tax) and a merger to be evasive.
Specifically, a natural person taxpayer
- firstly contributed two associated shareholdings in a newly established company (“Alpha”) wholly owned by them, pursuant to article 177, paragraph 2 bis of the TUIR;
- successively transferred their newly acquired total shareholdings to another company (“Beta”), which was also owned by them, pursuant to article 177, paragraph 2 bis of the TUIR;
- finally, it was their intent to implement a merger between Alpha and Beta.
The Tax Revenue Agency highlighted that the induced neutrality regime referred to in article 177 would be used “exclusively to obtain a tax advantage in contrast with the rationale” of the regime itself, and in particular – although not explicitly indicated in the response – with the requirement of the sole personality of the receiving company.
Obtaining an undue tax advantage represents the first and most significant element of the abuse of rights, pursuant to art. 10 of Law 212/2000.
Please note that for an operation to be considered abusive, it must include three key characteristics:
- obtaining an undue tax advantage;
- absence of financial substance;
- essentiality of the tax benefit.
For the document concerned, the Revenue Agency clarified that the operations in question could be considered an abuse of rights since, in addition to highlighting the obtainment of an undue tax advantage, they appear to have been designed solely to obtain a tax benefit without any actual economic justification.
