Participation exemption under investigation on exchanges of shares

In the pages of Administration & Finance (no. 12/2024), published by Wolters Kluwer, Maria Lucia Di Tanna in collaboration with Giulia Sorci and Davide Greco comment on the recent tax ruling (160/2024) made by the Italian Tax Authorities regarding the relationship between the participation exemption regime and the exchanges of shares regime. 

The colleagues’ analysis around the "pex clause" provided by article 177, paragraph 2-bis of the ITCA (i.e. Italian Income Tax Code Act). This clause imposes on the transferee company the obligation to wait a longer period (60 months) rather than the ordinary period (12 months) in order to benefit from the participation exemption regime in the event of the sale of the participation received by contribution. This implies, as specified by the Italian Tax Authorities in the aforementioned ruling, that any sale made before the expiry of the aforementioned 60 months will result in (i) fully taxable capital gains or (ii) fully deductible capital losses.