Agency P.E., instructions and independent status: where to set the bar?

08/05/2018 -  Stefano Guarino

International Taxation

It goes without saying that by entering into agency agreements, foreign companies may expand their business over and above their national borders; however, in doing so they take the chance to give rise to Agency P.E. whenever the agent may be deemed at the "dependency" of the principal. According to the OECD Commentary, a tell-tale sign of dependency is found every time the agent is subject to the “detailed instructions” of the principal. However, under the EU and Italian law, the agent has the “duty” to comply with the instructions of the principal; this duty is part and parcel of the agency agreement, and, accordingly, does not undermine the independent status of th...

The Principal Purpose Test and the Principle of Good Faith: Two Sides of the Same Coin?

19/01/2018 -  Stefano Morri, Stefano Guarino

International Taxation

The article analyses some issues regarding the true nature  of the PPT rule (i.e., the general anti-abuse rule which introduces the so-called Principal Purpose Test), its relationship with the principle of good faith and its effectiveness under the Italian legal system. In general terms, the PPT rule is triggered when (i) one of the principal purposes of an arrangement or transaction is to secure a benefit under a tax treaty and (ii) obtaining that benefit under these circumstances would be contrary to the object and purpose of the tax treaty. According to paragraph 14 of Action 6, the PPT rule is rooted in an existing “guiding principle”, which – in a nutshell –...

Italy’s Shifting Approach to Beneficial Ownership and Static Holding Companies

12/09/2017 -  Davide Rossetti, Stefano Guarino

Tax advisory and tax compliance

In a series of related judgments dated December 28, 2016, the Italian Supreme Court (Corte Suprema di Cassazione) recognized that static holding companies can be the beneficial owners of dividends, emphasizing the need to apply specific criteria that account for the peculiar nature of the static holding business model. These judgments are an important step in Italian jurisprudence on beneficial ownership, and they manage to close the gap between national and international trends, rejecting any automatic correlation between static holdings and conduit companies. In this article, the authors discuss a series of recent Italian Supreme Court judgments that serve as an importa...

A Lose-Lose Situation: EU Freedoms Versus Italian Taxation on Winnings Prior to Recent Italian Amendments

18/07/2017 -  Davide Rossetti, Stefano Guarino

Tax advisory and tax compliance

In Case No. 9001 (14 October 2016),1 a verification notice was issued by the Italian tax authorities against the taxpayer (an Italian resident) on the grounds that winningsat casinos located in Slovenia were not declared in his tax return; the taxpayer appealed the assessment before the Italian Tax Court of first instance, which decided in favour of the tax authorities and then to the upper Regional Tax Court of Naples. His argument was that such rules on winnings provided for a “less favourable” tax treatment for Italian resident taxpayers who played in EU Member States outside of Italy compared to those applicable to Italian residents who play...

Attachment of shares: the need of the double recording, on the title and on the shareholders’ register

31/05/2017 -  Cristina Cengia, Francesca Giovannardi

Corporate, Finance and Capital Market

Civil section 1 of the Italian Supreme Court, by its judgement no. 1588 of January 20th 2017, adopted a position in relation to the attachment of shares for companies limited by shares. The Court stated that, for the purpose of the valid creation of the constraint and its effectiveness in respect of third parties, it is necessary to record such constraint both on the title and on the shareholders’ register. In the present case, the shares owned by a shareholder in a company limited by shares were subject to attachment proceeding. Nonetheless, the constraint on the attached shares was not recorded on the title; instead, the shares were transferred by endorsement to a third party who, in...

Legislative Decree 50/2017: the medium and small-sized limited liability companies have now access to on-line public offers of capitals

29/05/2017 -  Cristina Cengia, Francesca Giovannardi

Corporate, Finance and Capital Market

Article 57, par. 1 of the Legislative Decree 50/2017 (so called “Decreto Correttivo”) extended to medium and small-sized companies, funded as limited liability companies, the access to the crowdfunding, a type of loan consisting in the on-line subscription of the share capital of the financed  company, through a public offer. This is an important intervention on the issue if we consider, in particular, that Article 2468, par. 1, of the Italian Civil Code - a fundamental rule in Corporate Law - establishes that shareholders’ holdings in the share capital of limited liability companies cannot be subject to public offers. Within the European context, Italy is a pioneer in...

Participation Exemption and Foreign Entities: How Far Can Judicial Interpretation Go?

02/05/2017 -  Stefano Morri, Stefano Guarino

Tax advisory and tax compliance

The Italian taxation of capital gains realized by a company resident in France that has a 100% participation in an Italian company involves an application of the participation exemption regime that differs in comparison to that applicable to Italian companies. This distinction is grounded in the unique rules applicable to the computation of taxable income: capital gains realized by foreign entities are treated, for tax purposes, as “other income” (redditi diversi), whereas those realized by Italian resident entities are computed as “business income”.The Italian Regional Tax Court of Abruzzo considered this difference to be in violation of the EU freedom of establishme...

A Battle for the Revenue Between Giants: The Apple Case

27/04/2017 -  Stefano Morri, Stefano Guarino

Tax advisory and tax compliance

The recent decision in the Apple case illustrates the European Commission’s general approach to advance tax rulings that member states’ tax authorities have granted to taxpayers. The trend is to find that the tax savings resulting from these rulings is state aid and subject to recovery by the commission, even if this comes at the expense of a taxpayer’s legitimate expectations. The Apple decision, however, also exhibits some peculiarities that distinguish it from other famous commission rulings that apply state aid rules. These departures stem from characteristics of the Irish advance tax ruling itself and from the EU’s core principles regarding the allocation of...

The conflict of interests among creditors in the composition with creditors and in bankruptcy agreements

21/03/2017 -  Stefano Morri, Francesca Giovannardi

Business crisis

There has always been discussion about the conflict of interests among creditors in the composition proceedings. Bankruptcy Law does not regulate nor typify the institution at issue, whereas it is regulated as regards companies. The recent reform of the Bankruptcy Law in June 2015, introduced some changes in the composition with creditors proceedings, such as the possibility for creditors to make their own counter-proposal against the debtor’s one. There is, however, a difference between composition with creditors and bankruptcy agreements: in the first case, the reform provides some specific countermeasures aimed at neutralizing any possible adverse effects resulting from the conflict...

Trasfer of company with IRES reduction

20/03/2017 -  Roberta De Pirro


For the purposes of the corporate income tax (IRES),it is possible to deduct the higher registration fee paid by the pending tax payer as a result of the recharacterization of business contribution followed by the tranfer of its shares into the transfer of that business. Conversely, the same deduction does not apply for the purposes of the regional business activity tax (IRAP).  This is what the Central Regulatory Department of the Italian Tax Agency stated in response to the appeal filed by a non IAS adopter company, related to the treatment applicable to the registry tax and to the deriving interests paid as a result of the aforesaid requalification.     In the present ...


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