"News May 2, 2016-transformation from srl to snc: attention to the effects on shareholders"

Posted by on May 2, 2016

The transformation of "regressive" – that is, wholly owned non-restricted, companies typically Ires the transformation from Srl to Snc – must be carefully considered in view of the tax status of members; in fact, as is well known, under the scheme of taxation of limited liability companies, except in the case of the option for transparency under article 115 of the tax code, the profit reserves are meant to be taxed only shareholders at the time of payment.

With transformation into partnerships, article 170, paragraph 4, of the tax code provides that the reserves established with the profits of the transformed Srl shall be allocated to members, and so taxed:

  • in the tax period in which they are distributed or used for any purpose other than to cover losses, provided that after processing are entered in the budget with an indication of their origin;
  • in the tax period following its transformation, if not shown in the budget (and that is the case that occurs when the Snc adopts the simplified accounting system) or if listed but with no indication of their origin.

If the tax transparency regime transformed Srl had adopted under article 115 of the tax code, these profits have already been taxed to shareholders, so their next deal would not produce additional tax base for professional men.

It then lays a particular theme for members individuals, firms and operators who have not therefore investments in transformed Srl, before, and then personally transformed Snc.

The matter directly involves the company in his capacity as Deputy of sets during the subsequent distribution of surplus funds formed in pre processing; in the case of associate individual holder of unqualified, article 27, paragraph 1, P.r.decree 600/1973, involves the application of a source-withholding tax from the company dispensing equal to 26% of profit distributed.

However, the reference standard, where it intends to identify subjects called to act as withholding agents in case of distribution of profits, invokes expressly those mentioned in article 73, paragraph 1, letter a) and b) of the tax code, namely: Spa, Sapa, Srl, cooperatives and other similar subjects, public and private organizations other than the company, residing in the territory of the State and merchants commercial enterprise activity.

Is not invoked the partnerships, which would not therefore title to act as the withholding agent upon payment to members of the reserves formed with earnings before transformation.

In a direct MAP of May 2006, the tax authorities concluded that, in the presence of a distribution of surplus funds from a company of people born from the conversion of a capital company, as the company of persons not fulfilling the function of withholding agent not being invoked among the subjects mentioned in article 27, paragraph 1, of the P.r.decree 600/1973, does not apply the withholding tax in case of distribution of dividends to shareholders holding non-qualified.

It follows that these profits will be subject, according to the Administration, the same conditions of profits received by shareholders, holders of qualifying holdings, helping to form the social perceiver's taxable income to the extent of 49.72% of the gross amount.

In essence, this conclusion leads, solely for the purpose of taxation of dividend from retained earnings ante format transformation, such a qualification of the virtual partner in qualifying, with the effect of bring back said useful in filing tax returns.