Ruling N.169/2024 Issued by Italian Tax Authorities

Tax agency recently enacted ruling 169/2024 in which it states that “…  according to the provisions of Article 10a(1) of Law no. 212 of 27 July 2000, No. 212 of 27 July 2000, as amended, concerning the ‘’Discipline of abuse of rights or tax avoidance tax avoidance‘’, in order for a transaction to be considered abusive, the Administration must identify and prove the joint occurrence of three prerequisites constitutive conditions: a) the realisation of an ‘’undue‘’ tax advantage, consisting of ‘’benefits, even not immediate, realised contrary to the purposes of the tax rules or the principles of the tax system’; (b) the absence of ‘’economic substance‘’ of the transaction or transactions carried out being carried out consisting of ‘facts, acts and contracts, even if connected, incapable of producing significant effects other than tax advantages’; (c) the essentiality of the attainment of a ‘’tax advantage‘’. The absence of one of the three constitutive prerequisites of abuse determines a judgement of absence of abusiveness. In the following paragraph 3, the legislature expressly clarified that transactions cannot in any case be considered abusive if they present the three elements indicated above, are justified by valid extra-tax reasons that are not marginal (including of an organisational or managerial nature that respond to purposes of improving structural or functional improvement of the business or professional activity) …”.

The ruling is very important considering that it indicates that the interest of the company involved (which could have been liquidated due to the problems that arose between the shareholders of the same) are to be considered as a valid economic reason that prevents the existence of tax avoidance.

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