MAC AND MAE CLAUSES.
“Material adverse change” (MAC) and “material adverse effect” (MAE) clauses are increasingly being used in commercial and corporate law contracts, in particular in international M&A transactions.
The need to adopt the precautions associated with the MAC and MAE clauses arose from the terrorist attacks of 11 September 2001 and is connected to the opportunity expressed by the contracting parties to reciprocally recognise a protection to be placed in a phase prior to the executive phase and that takes into due consideration certain calamitous events that could reverberate their disastrous effects and repercussions, not only in the restricted place of their occurrence, but, due to the effect of the propagation of the globalised world (now more than ever under discussion) also in other parts of the planet especially in the economic and financial sphere traditionally sensitive to potential domino effects.
MAC and MAE have been the subject of analysis and examination during the recent – and unfortunately not yet completely eradicated – Covid-19 pandemic, and even more recently scholars have examined them in the light of the ongoing Russia-Ukraine conflict. These events are different in nature, but they have in common that they have generated an unpredictable global geopolitical shock with very serious repercussions in the economic and financial spheres.
While practitioners have had the opportunity to discuss and express themselves more analytically in relation to the MAC/MAE-Covid-19 ratio, some have already pointed out that the war that began almost two months ago, and the uncertainty associated with it, will also negatively impact the M&A sector in the immediate future.
The MAC and MAE clauses derived from Anglo-Saxon common law countries, as a result of the well-known phenomenon of legal transplant, were introduced some time ago also in the Italian legal system, where they can be translated by the expression “no adverse effect clause”.
Such clauses find a concrete application especially in those transactions characterised by a time lag between the moment of the conclusion of the agreement (signing) and the moment of the actual performance of the obligations covered by the agreement (closing), such as, for instance, the cases of purchase of shareholdings subject to conditions. Such clauses can be also found in project financing contracts, the purchase of a branch of a business and in company merger and demerger projects. Generally speaking, although they have sprung up in the corporate context, it is not excluded that they may also be applied in other agreements characterised by the time lapse referred to above.
As can be inferred from their very name, the purpose of the mechanism under discussion is connected to the need to provide a positive discipline in the event that any adverse effects should occur in the medium term between the time the agreement is reached and the subsequent closing. The relevant unfavourable effects to be taken into account are those events which entail a considerable prejudice to the economic structure of the transaction originally envisaged and capable of substantially modifying the economic and financial position of one of the parties (MAC clause), or those which generate a general change in the context in which the agreement should have been applied (MAE clause) and, consequently, affect the structure of the transaction underlying the agreement.
At this point, it is worth drawing a distinction, albeit briefly, between MAC and the MAE, on the one hand, and the hardship clause, on the other. The hardship clause, which is usually provided for in long-term contracts, is intended to regulate the occurrence of events capable of substantially altering the economic equilibrium of the contract and making the performance excessively onerous. The alteration in question is relevant if it occurs during the performance of the contractual obligations and not at a time prior to the performance itself as is the case with the MAC and MAE clauses.
The latter, on a concrete level, are configured as a sort of “loophole” from the contract, allowing the party concerned to withdraw, or to invoke a remodulation of the performance originally agreed upon. This could occur in the presence of events such as the loss of a strategic client for the target company whose acquisition is contemplated, or a factum principis that irreparably harms the business of the same or, again, a substantial reduction in assets in the period between the agreement and the closing.
From a practical point of view, it should be noted that, instead of analytically identifying the events that could trigger the protection mechanism provided by MAC or MAE clauses, a series of exceptions are identified which exclude the application of such clauses (carve-outs), making the protection mechanism valid for all other hypotheses that have not been specifically mentioned.
Despite the fact that the clauses in question, as we have seen, are not typical of civil law systems, from a comparative point of view some similarity can be discerned with the institutions of “supervening impossibility” (akin to frustration) under Art. 1463 cc and of excessive onerousness (akin to hardship) under Art. 1467 cc. having in mind that the above rules refer to contracts already in existence and not to the period prior to their execution.
In other words, the MAC and MAE clauses offer protection limited to the “embryonic phase” of the agreement by allowing unilateral termination upon the occurrence of certain circumstances, whereas the institutions typified by the legislator have a broader scope which also contemplates the performance phase. The clauses in question may therefore be subsumed within the framework of a hypothesis of unilateral and conventional termination pursuant to Art. 1373 of the Civil Code: “If one of the parties is granted the right to withdraw from the contract, that right may be exercised until the contract has been performed in principle“.
Now, if the dissemination of Covid-19 was relevant for the purposes of being able to rely on the operation of the clauses in question, in so far as:
– an epidemic did not fall within the range of events excluded from the scope of the clauses;
– constituted an event likely to affect the general context in which the contractual relationship was to be performed and/or the sphere of the parties (this could hardly be the case for contracts entered into after March 2020 when the pandemic situation was well established and no longer unpredictable);
– and could be qualified as “material”, i.e. as a relevant event capable of significantly affecting the economic transaction which is the subject matter of the contract (this would not be the case for events producing detrimental effects but reversible in the short or medium term).
As regards the application of the MAC and MAE clauses in the current war context, the picture is not yet entirely clear. Even if the Russian-Ukrainian conflict is considered as a circumstance, in theory, capable of altering the “sinallagmatic” balance and of breaking the rationale, for example, of an acquisition of a target company (think of a target company with production plants in the combat zones), it is doubtful that the protection offered by the clauses in question can be invoked regardless of a concrete analysis of the individual case. Indeed, it would be difficult for a party to benefit from the remedies offered by MAC and MAE clauses when the negative effects on the target company would result from a general change in the economic conditions linked to the reference market or from a general increase in raw materials.
This could also apply with respect to economic sanctions related to the conflict with the consequence that in order to avail oneself of the relevant remedy it will be necessary to provide evidence that the detrimental event is a source of persistent damage to the target company’s profitability, which can also be assessed in the long term.
Think, for example, of a target company whose operating plants located abroad in Ukrainian territory have been irreparably damaged by the bombings, or of a luxury manufacturing company whose reference market is Russia and whose survival is threatened by the export blockade caused by the sanctions. A mere drop in revenue, even if substantial, but temporary, would not be sufficient to invoke the operation of either clause.
In conclusion, notwithstanding the problems of interpretation that must inevitably be solved through the investigation on a case-by-case analysis, it seems, in any event, appropriate to include MAC & MAE clauses in contracts concerning corporate transactions (but not only), especially in such a period of serious uncertainty since the escalation of the conflict or its recrudescence could have further negative consequences.
Nor, on the other hand, does the alternative of hardship appear entirely feasible, which is not overlapping and is more suitable to regulate relationships of duration than it is in corporate transactions, since it may, if anything, be applicable to a renegotiation of the contractual terms but not to the possibility of withdrawing from the contract.
SURETY GIVEN BY A COMPANY NOT ENROLLED IN THE REQUIRED REGISTER: WHAT IS THE FATE OF THE CONTRACT?
In a recent judgment, the Joint Divisions of the Court of Cassation have (partially, with particular reference to the case at hand) resolved the jurisprudential contrast concerning the fate of contracts entered into by a company exercising banking activity in the absence of the prescribed authorizations. The issue had been referred to the Joint Divisions by the First Division with the interlocutory order no. 24016 of 2021.
The case originated with a company’s application for the submission of a claim against a bankrupt estate, in this case a “confidi minori”, on the basis of a surety. The delegated judge refused to allow the claim to be lodged with the bankruptcy court on the grounds that the surety was null and void as it had been provided by an unqualified party, a “minor confidi”, to a company associated with it and to provide a surety to a non-banking contract.
After the delegated judge had refused to accept the claim, then the Court of Rome had admitted it, an appeal was lodged within the Court of Cassation and the matter was referred to the Joint Divisions.
The interlocutory order by means of which the First Division referred the matter to the Joint Divisions clarifies the reference rules and the distinction between minor confidi and major confidi. The minor confidi, registered in the list referred to in Article 155, paragraph 4 of the TUB, carry out exclusively collective credit guarantee activities and instrumental services aimed at favouring the financing of the other subsidiaries of the group by the banks, whereas the major confidi, which are instead required to be registered in the list referred to in Article 107 of the TUB, carry out mainly collective credit guarantee activities and on a residual basis all the activities reserved to the financial intermediaries registered in the same list. According to the First Division, the surety given by the minor confidi to its member company is void because the minor confidi may provide sureties in favour of their members only in respect of banking contracts entered into with banks, whereas only the major confidi, which are entered on the list referred to in Article 107 TUB, are authorised to provide surety of any kind.
The issue referred to the Joint Divisions concerns, therefore, the validity or nullity of the surety given to one of its members by a minor confidi registered in the special list referred to in Article 155, paragraph 4 TUB, given that the rule provides that, in the absence of registration in the list referred to in Article 107 TUB, such operators may only carry out activities of collective guarantee of credit and instrumental services having as their object the provision of sureties aimed at financing by banks and that the regulatory framework does not provide for a textual nullity for other activities that may be carried out by such entities.
According to the Joint Divisions, there is no nullity of the surety given by the “confidi minori”. The interpretation of the Supreme Court is based on the fact that the possible prohibition of the provision of the surety by the “confidi minore” does not derive from a hypothesis of textual nullity but it would only indirectly derive from the rules. According to the Joint Divisions, it cannot be inferred from the rules establishing that the “confidi minori” carry out exclusively the activity of collective guarantee of credits, in order to favour the access to bank credit of the small and medium-sized member companies, that there is an absolute prohibition to carry out different activities. This would lead to the conclusion that anyone could provide sureties with the exception of the “confidi minori” with their members.
According to the Court, the nullity under Article 1418 of the Civil Code must derive from the violation of rules with sufficiently specific, precise and identified content in the absence of which it is not possible to impose the sanction of nullity of negotiations.
The Supreme Court resolved the matter by stating the following principle of law: “The surety given by a so-called minor confidi, registered in the list referred to in Article 155, paragraph 4 T.u.b., in the interest of one of its associates to guarantee a credit deriving from a non-banking contract, is not null and void for violation of a mandatory rule, since nullity is not provided for in textual terms, nor can it be inferred indirectly from the provision according to which such entities carry out “exclusively” the “activity of collective guarantee of credits and services connected or instrumental thereto” to favour financing by banks and other entities operating in the financial sector. The issuance of guarantees is an activity that is not reserved for authorised entities (such as financial intermediaries under Article 107 of the TUB), nor is it precluded for cooperative societies that operate in line with the corporate purpose.”
COVID MORATORIUM: HOW TO CALCULATE INTEREST PAYABLE?
Article 56 of the “Cura Italia” Decree, as subsequently extend, with the aim at supporting business activities damaged by the Covid 19 epidemic crisis and ensure liquidity to companies, has provided, inter alia, the possibility of suspending the payment of leasing fees or instalments relating to mortgages and other financing.
The regulatory framework in question has not clearly defined the methods of calculating the interest and of repayment of the suspended debt. In this regard, the recent rulings of the ABF of Rome have provided an interpretation on how to calculate the interest to be applied for the debt suspended during the moratorium period. In view of the considerable use of the moratorium adopted by the Government, the aforementioned legislation is undoubtedly of particular interest for all the beneficiary enterprises, now interested in remodulating the repayment of their credit facilities and defining the payment of interest due for the suspension of payments.
The Law-Decree no. 18 of 17 March 2020 (“Cura Italia”) formally recognized Covid 19 as an exceptional event and a serious disturbance in the economy, providing for the possibility for enterprises (i) qualifying as SMEs pursuant to the European definition, (ii) which did not have debt positions classified as non-performing exposures, and (iii) which were in difficulty due to the epidemic, to benefit from a period of suspension from the payment of instalments or financial charges.
The duration of the measures, contained in the “Cura Italia” Decree, originally set forth until 30 September 2020, was extended several times, finally with Decree-Law no. 73 of 2021 (also known as “Decreto sostegni bis“, in force since 26 May 2021) until 31 December 2021, but limited only to the quota capital of the financing.
In this context, the companies benefitting from the Covid moratorium need to define the methods of calculating the interest for the period of suspension of the repayment of the loan instalments and leasing fees.
The decisions of the Banking and Financial Arbitrator (“ABF”) no. 1411 of 21 January 2022 and no. 2286 of 8 February 2022, one regarding a financial leasing contract and the other one a mortgage loan, deal with this subject matter, bringing out a grey area on the operation of the provision in relation to the repayment of suspended payments and the calculation of the due interest.
In both disputes, the applicant contested the fact that the interest due had been calculated by the intermediary on the basis of the entire residual debt and not on the basis of the individual suspended installments.
Notably, one of the applicant argued that the interest applied was unlawful and that article 56, paragraph 2, letter c), of the “Cura Italia” Decree had been infringed, in the part where it was established that the suspension should not have entailed “new or higher charges for both parties”.
On this assumption, the applicant challenged, firstly, the legitimacy of the entire charge of interest, and, in the alternative, the legitimacy of the calculation method used by the intermediary, claiming that the interest for the moratorium should be calculated, if any, not on the entire amount of the loan, but only on the principal amount not reimbursed during the suspension period, at the rate defined by the agreement.
According to the regulatory reconstruction adopted by the ABF, the application of the suspension interest would be legitimate because, according to art. 56, the postponement of the repayment plan of the suspended instalments must take place “according to modalities that ensure the absence of new or higher charges for both parties”; in other words, the postponement cannot prejudice the expectations of the intermediary who has relied, in the management of credit risk, on the return of an amount calculated in a provisional way at the time the financing was granted.
On this point, the ABF also recalls the solution proposed by the Ministry of Economics and Finance through the FAQ published on its website, in which it is provided that, in the case of suspension of the entire instalment (capital and interest), the amortization plan is moved forward for a period equal to the suspension granted and the interest that accrues during the period of suspension is calculated on the entire residual capital at the interest rate of the original loan or leasing contract.
Following this approach, the extension of the amortization plan of the loan or the duration of the leasing contract would be a requirement for the application of said interest calculation method.
On the other hand, the calculation of interest may be different if the debtor does not intend to extend the repayment of the loan for a period equal to the moratorium one, either by proceeding with an early repayment or by entering into a negotiated agreement with a specific repayment schedule.
The heterogeneity of the factual circumstances, therefore, requires a careful assessment to be made case by case in order to adopt the appropriate method of interest calculation.
m.patrignani@macchi-gangemi.com
m.dragone@macchi-gangemi.com
g.pappacena@macchi-gangemi.com
THE COURT OF CASSATION RETURNS TO RULE, IN A CONTRADICTORY WAY, ON THE SO-CALLED “CROSS-COUNTERCLAIM”.
With two judgments filed a few months apart, the Court of Cassation returns to address the problematic procedural issue relating to the ways of proposition of the so-called “cross-counterclaim” between defendants in the same proceedings.
With judgment no. 12662 of 12/05/2021, the Court of Cassation has returned to address the issue, innovating the previous case-law scenario (which allowed its proposition directly in the deed of appearance filed in the 20 days prior to the hearing) and paving the way for its substantial equivalence to the summoning of a third party, pursuant to art. 269 of the Code of Civil Procedure (which – as well known – requires the defendant to ask the judge to postpone the first appearance hearing in order to be able to notify the third party notice).
With this innovative judgment, the judges of the Supreme Court have ruled the principle of law according to which “In civil proceedings, characterized by a system of forfeitures and foreclosures, consequent to the reform referred to in Law no. 353 of 1990 and subsequent, multiple amendments and additions, a defendant may bring a claim against another subject, also sued by the same plaintiff, in case of commonality of cause or to be guaranteed by him, making an application of deed of appearance promptly filed pursuant to articles 166 and 167 of Code of Civil Procedure and then proceeding pursuant to art. 269 of Code of Civil Procedure, with prior request to the judge to postpone the first hearing, in order to summon the other defendant in compliance with the procedural terms“.
Before this judgment, doctrine and case law had no doubts about the admissibility of bringing claims between defendants who were already parties to the proceedings, without the need for any notification (but only with the respect to the appearance in court in the twenty days before the hearing). This majority solution, which is not subject to compliance with the term for appearance pursuant to art. 163-bis of the Code of Civil Procedure, was characterized by the elasticity of the mechanism for the claim’s proposal, against the co-defendant and responded to the need to speed up the process and deflate of litigation. In fact, the mechanism pursuant to Article 269 of the Code of Civil Procedure is grounded on the need to allow the addressee of the claim to be aware of the terms of the dispute and to formally assume the status of party to the proceedings, a necessity – this – which would not exist, instead, regarding a subject who has already taken on this status since simultaneously summoned by the plaintiff.
Previously there was an isolated ruling in 2011 (judgment by Section 3, no. 8315 of 12/04/2011) which in part, had adhered to the minority arguments that required the need of the third-party notice pursuant to art. 269 of Code of Civil Procedure, where the “cross-counterclaim” was based on a title different from that of the plaintiff.
With the judgment no. 12662 of 12/05/2021, the Court of Cassation has returned to the issue, adhering to the solution adopted by the minority scenario, which wants a substantial equivalence between the claim proposed by the defendant against another defendant and that which should be proposed against any third-party (with consequent charge of compliance with the procedural rule referred to in Article 167, paragraph 3, of the Code of Civil Procedure, which requires the defendant to make a statement of his intention to call a third-party and to request the postponement of the hearing, pursuant to article 269 of the Code of Civil Procedure).
According to the Court of Cassation, there would not be a valid reason to deny the addressee of the so-called cross-counterclaim the enjoyment of a “full” term of appearance (ninety days and not only twenty) to articulate his defense, especially in view of the lapse that would accrue against him (about, for example, his right to call other third parties and to propose counterclaims).
Although the judges of the Court of Cassation recognize that this solution is clearly “penalizing”, they justify it recalling:
– the legal vacuum about the times and ways in which the co-defendant could formulate his defenses;
and
– the wording of Article 183, paragraph 5, of the Code of Civil Procedure, which gives only the plaintiff the right to react to the counterclaim brought against him by the defendant (not mentioning, precisely, the others mentioned in court).
This solution, which for some is questionable, was subsequently disavowed by the lapidary judgment of the Court of Cassation of 23/03/2022 no. 9441, which – after just eight months – established the following principle of law: “The defendant who intends to formulate a claim against another defendant does not have the burden to request the hearing’s postponement pursuant to art. 269 of the Code of Civil Procedure, but it is sufficient that he formulates the aforementioned claim within the terms and in the forms established for the counterclaim by Article 167, paragraph 2, of the Code of Civil Procedure“.
Pending new developments on the subject and/or a final ruling by the Joint Chambers of the Court of Cassation, it will still be good to (also) consider the 2021 ruling, if one would want to propose a cross-counterclaim against another defendant.
v.spinelli@macchi-gangemi.com
c.gentile@macchi-gangemi.com
OPPOSITION BY INJUNCTIONAL DECREE IN THE RENTAL MATTER: APPEAL OR SUBSCRIPTION?
With sentence 13.01.2022 n. 927, the United Sections of the Court of Cassation have clarified what are the application limits of the amnesty for change in the rite pursuant to article 4 of Legislative Decree 150/2021 (the so-called “decree simplification of rites”) in the event of opposition to an injunction in the context of the lease introduced with a writ of summons rather than with an appeal pursuant to Article 447 bis of the Italian Code of Civil Procedure.
The practical case arose from a monitoring measure issued by the Court of Palermo and notified by the injunction on 18.07.2014 for the payment of occupancy indemnities and ancillary charges; the opposition, erroneously formalized with a summons at fixed hearing and not with appeal, after the change of the rite from ordinary to lease, was declared late as it was promoted beyond the 40-day term provided for by art. 641 of the Italian Criminal Code.
The court, similarly to what happens with the filing of the appeal pursuant to art. 447-bis of the Italian Criminal Code, identified the actual initiation of the dispute in the filing of the case (and not in the notification of the summons); hence the ruling of inadmissibility of the opposition.
The Court of Appeal of Palermo, considering the burden, found that art. 4 paragraph 5 of Legislative Decree 150/2011 which, as known, is without prejudice to the substantial and procedural effects of the request produced before the change in the rite. To be honest, despite this favourable ruling on the point of law, the appeal was still rejected by the territorial court.
The subject of the operation of art. 4 cited in the case of opposition to an injunction was then re-proposed in the third degree of judgment by the losing party; subsequently, with interlocutory ordinance no. 13556/2021 the Third Section of the Supreme College remitted the appeal to the First President for a decision of the United Sections.
Coming now to ruling n. 927/2022 cited at the outset, the principle recently developed by the judges of the Supreme Court is the following: when the opposition to the injunction on the matter is subject to the special rite provided for by art. 447-bis of the Italian Civil Procedure is erroneously proposed with a writ of summons rather than with an appeal, the discipline of the change of the rite referred to in art. 4 paragraph 5 of Legislative Decree 150/2011 as this rule is applicable only when a dispute is promoted in forms other than those provided for by the models regulated by the aforementioned Legislative Decree 150/2011 (that is, other than the ordinary rite of cognition, the work / lease rite and the summary rite pursuant to art. 702 bis et seq.).
Therefore, the United Sections specify, by virtue of the conversion principle referred to in art. 156 paragraph 3 of the Code of Civil Procedure, any writ of summons produces the effects of the appeal only when it is filed with the registry – registration in the role of the case – within the term referred to in art. 641 of the Italian Code of Civil Procedure.
The decision constitutes an interpretative contrast for which, on the one hand, the judgment of opposition to an injunction was assimilated to a sort of “appeal” of the monitoring measure, an appeal which, by not introducing a truly autonomous judgment, would allow the application of the ‘art. 4 of the Legislative Decree. 150/2021 as the latter would be referable only to disputes “promoted” with the rites indicated above (eg. Cass. Civil Section. Un. 18.07.2001, no. 9769); on the other hand, some rulings already excluded the operation of art. 4 of the Legislative Decree. 150/2021 in case of opposition to an injunction (Cass. Civ. Section VI, 12.03.2019, n. 7071; Cass. Civ. Section III, 25.05.2018, n. 13072).
In conclusion, in the event of opposition to an injunction issued in the leasing matter, it is advisable not to initiate the judgment with a writ of summons; in the event of an error, in order to usefully count the term for the opposition, it will be necessary to take into account the filing of the summons with the registry and not its notification and this since, according to the United Sections of the Court of Cassation, in this case it is not possible invoke the salvation provided for in art. 4 paragraph 5 of Legislative Decree 150/2011.
e.storari@macchi-gangemi.com
f.montanari@macchi-gangemi.com
REVALUATION OF COMPANY ASSETS AND TAX STEP-UP: OFFICIAL CLARIFICATIONS PUBLISHED BY THE ITALIAN TAX AUTHORITIES.
With Circular letter no. 6/E of March 1, 2022 (hereinafter, the “Circular Letter“), the Italian tax authorities issued clarifications regarding the regulations set out in art. 110 of Law Decree no. 104 of August 14, 2020, implemented, with amendments, by Law no. 126 of October 13, 2020 (the “Decreto Agosto”), whereby was (re)introduced:
– a “general” asset revaluation regime aimed at all business entities (including companies, business entities and partnerships, permanent establishments of non-resident entities, etc.) that do not adopt international accounting standards in the preparation of their financial statements;
– the possibility to proceed with a tax step-up (so-called “realignment”) of the higher values already recorded in the financial statements, also for the benefit of “IAS adopter” parties.
1. Revaluation of company assets.
The “new” revaluation regime, whose rules expressly refer to the previous (and similar) revaluation laws issued in the past, provides that both tangible (fixed) assets – with the exception of real estate utilized in the production or in any case in the business activities – and intangible assets of companies/business entities can be revalued (even if fully amortized), including participations in subsidiaries and associated companies.
It is possible to carry out the revaluation separately for each asset (therefore, not with reference to uniformed classes of the same), and the revaluation operates with regard to the assets resulting from the financial statements as of December 31, 2019.
The revaluation option operates:
– only for accounting purposes (in this case, it is possible to opt for this operation also in the financial statements of the second financial year following the one in progress as of 31 December 2019, i.e. financial statements as of 31 December 2021 for entities with financial year following the calendar year); or
– also with tax relevance, subject to the payment of a 3% substitute tax.
The higher (revaluated) values can be considered for IRES and IRAP purposes starting from the year following that in which the revaluation was carried out. There is also the possibility to release (i.e. distribute) the revaluated amounts (being reserves subject to a tax suspension regime) by paying an additional substitute tax of 10%.
2. Tax step-up.
The tax step-up (“realignment”) of higher values already accounted in the financial statements, differently from the revaluation, is only relevant for tax purposes upon payment of the substitute tax of 3%.
3. The main clarifications provided by the Italian tax authorities.
The main clarifications included in the Circular Letter can be summarized as follows:
– considering that the regulations provided by art. 110 of the “Decreto Agosto” refer to provisions already present in the previous revaluation and realignment regimes, the Circular Letter specifies that the clarifications already provided by the various documents (see Circular letters no. 14/E of 2017, no. 18/E of 2006, no. 11/E of 2009 and no. 13/E of 2014) are still applicable, insofar as they are compatible;
– the Italian tax authorities, by amending their interpretation previously provided through the draft Circular of November 23, 2021, and with the answer to ruling no. 316/2019, specifies that, from a tax point of view, the suspension restriction on the reserves formed through the revaluation asset balance shall cease, in the context of extraordinary transactions, only in the event that the same are attributed, even indirectly or de facto, to the shareholder or participant;
– intangible assets such as trademarks, patents, licenses, etc. may be revalued, provided they are legally protected and with the exclusion of those whose production or exchange is the purpose of the business activity;
– in line with established case law, the Italian tax authorities clarify that the taxable base for the release of reserves in suspension of taxation is formed by the book value of the reserve, i.e. net of the substitute tax previously paid;
– finally, it is specified that the extension of the amortization period from 18 to 50 years for the revaluation value attributed to intangible assets pursuant to paragraph 8-ter of art. 110 of the “Decreto Agosto”, as amended by art. 1, paragraph 622 of the 2022 Budget Law, concerns all assets for which the deduction, for income tax and IRAP purposes, of amortization quotas over 18 years is envisaged (and, therefore, not only goodwill but also trademarks).
a.salvatore@macchi-gangemi.com
f.dicesare@macchi-gangemi.com
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