International mergers and Italian anti-abuse regulations

In one of these rulings, the situation was examined of a group with a parent company and a sub-holding company both resident in France, and three operating companies resident in Italy.

The operation analysed consisted of the merger in France of the subholding 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 this case the operation took place between two companies both resident in France.

The tax authorities concluded that this operation is not abusive and can be considered neutral according to Italian domestic tax legislation as the following conditions were 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 Italian law; and
  
  
• the operation produces effects in Italy on the tax position of at least one of the parties involved.

With respect to the condition that the operation concerned produce effects in Italy on the position of at least one of the involved parties, in this example, 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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