All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Italy: Italian entry tax in merger operations

Sponsored by sponsored-firms-hager.png
Clarifications on entry tax related to mergers have been issued

Gian Luca Nieddu and Barbara Scampuddu of Hager & Partners explain the latest clarifications on entry tax associated with mergers by incorporation in Italy.

In the case of a merger by incorporation of a non-Italian entity into an Italian entity, there is a need to determine the entry tax values of assets and liabilities that flow into the Italian acquiring company. 

Resolution no. 92/E issued by the Italian Revenue Agency on November 5 2019 provided clarifications regarding entry tax as per Article 166-bis of the Presidential Decree no. 917/1986 (Income Tax Code (ITC)) with reference to a merger by incorporation which occurred in 2018 of a company residing in a country included in the white list (please refer to Article 11, paragraph 4, letter (c) of Legislative Decree no. 239/1996).

Namely, Article 12 of Legislative Decree no. 147/2015 added Article 166-bis to the ITC, setting forth the tax regime applicable to inbound immigration of non-resident companies to Italy, even in the case of a M&A operations. Under Article 166-bis, in the case that non-resident companies immigrate to Italy from countries included in the white list and become tax residents in Italy, the assets and liabilities of such companies have to be recognised at their market value, even if they have been subject to any exit taxation in the country of their origin. 

The application of the market value criterion ensures neutrality with respect to the business events that took place in the foreign country, including the payment of an exit tax. In fact, the mandatory application of the market value criterion avoids the fact that the assets’ values were predetermined in the foreign country for the purposes of the exit tax due therein, and still have automatic recognition for Italian tax purposes or may have relevance for tax purposes in Italy by means of appraisals.

Please note that in the case at stake, the goodwill derived from a merger that had be accounted for in the balance sheet of the acquiring company as an intangible asset. In this regard, it should be noted that the previous version of Article 166-bis was in force until December 31 2018 and therefore applied to the case at stake, and did not provide for the valuation of goodwill. Accordingly, Resolution no. 92/E stated that goodwill does not account in the balance sheet of the foreign entity that transfers its residence to Italy by means of a merger operation. Such items are registered in the financial statements of the Italian acquiring company when the merger is completed.

More recently, Legislative Decree no. 142/2018 amended Article 166-bis in order to:

  • clarify that the ‘market value’ is the arm’s length value of the transferred assets that would be determined for transfer pricing purposes; and

  • expressly provide that the goodwill value can be recognised for Italian entry tax purposes in respect to the operations which have occurred from January 1 2019.



Gian Luca Nieddu 

T: +39 02 7780711

E: gianluca.nieddu@hager-partners.it



Barbara Scampuddu 

T: +39 02 7780711

E: barbara.scampuddu@hager-partners.it





More from across our site

This week European Commission officials consider legal loopholes to secure minimum corporate taxation, while Cisco and Microsoft shareholders call for tax transparency.
The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
Multinationals are asking world leaders to put a scale on carbon pricing to tackle climate change at the 48th G7 summit in Germany, from June 26 to 28.
The state secretary told the French press that the country continues to oppose pillar two’s global minimum tax rate following an Ecofin meeting last week.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree