The facts are those of a multinational group which in 2020 transferred the Italian activities carried on through the permanent establishment of a UK company to a Dutch group company. The contribution of the going concern was completed on 31 December 2020, by deed executed before a Dutch notary and governed by the laws of England and Wales, effective from 1 January 2021; the shares issued by the Dutch transferee were allotted directly to the UK head office. The claimant, which had paid IRES on the resulting capital gain, sought a refund alleging breach of Articles 9 and 10 of Directive 2009/133/EC and of Articles 176(4) and 178 TUIR, as well as of Article 49 TFEU, on the ground that the cross-border contribution was penalised as compared with a domestic one. The Revenue Agency countered that neutrality requires the shares to be attributed to the same branch and that, the sole Italian business of the non-resident having been contributed, all entrepreneurial activity in the territory of the State had ceased.
The Court endorsed the Revenue Agency’s position, starting from the scope of Article 178(1)(c) and from Article 179(2), under which the provisions of paragraph 1 apply to a non-resident beneficiary with regard to its Italian permanent establishment “limited to the assets of the resident transferor or, in the case referred to in Article 178(1)(d), of the non-resident transferor, actually flowing into it”. It inferred that, as argued by the Revenue Agency, “in order for the transaction not to become taxable, the shares issued upon the contribution of the business of the Italian permanent establishment must be ‘attributed’ to the same branch”, or else that the transferee must continue the business in Italy through a permanent establishment. In the Court’s view, “there is no difference in treatment between domestic and cross-border transactions, given that if the transaction entails the cessation of entrepreneurial activity in Italy, the Member State loses the possibility of taxing the latent capital gains at a later point in time”.
As a matter of substance the decision follows the established administrative line. In Resolution no. 63/E of 9 August 2018, and subsequently in ruling response no. 633 of 31 December 2020, the Revenue Agency clarified that Articles 178 to 181 contain no rule on the treatment of the securities received upon the contribution, so that recourse must be had to Article 176(4) TUIR, under which the shares received “are deemed to be recorded as financial fixed assets in the financial statements in which the assets of the contributed business were recorded”: neutrality is therefore “at its root conditional upon the participation in the transferee flowing, as a result of that transaction, into the same accounting records” of the contributing permanent establishment, consistently with the functionally separate entity principle reflected in Article 152(2) TUIR.
From an operational standpoint the ‘lesson’ is evidentiary before it is interpretative. In refund proceedings Article 7(5-bis) of Legislative Decree no. 546/1992 places on the taxpayer the burden of “setting out the grounds of the refund claim, where the claim does not follow from the payment of amounts covered by challenged assessments”: the continuity of the business activity in Italy must therefore be documented, not merely asserted.
