"NEWS November 4, 2016-Backdating tax merger with partnerships"
Euroconference Newshttp://www.ecnews.it/
The backdating of tax effects in the context of a merger allows the acquiring institution to determine, for the tax period in which the transaction is concluded, a single tax base – for the purposes of direct taxation – which converge all positive and negative components have matured in the meantime by the incorporated.
The rule contained in article 172, paragraph 9, of the tax code has the clear intention to ensure the "continuity" of values between the companies concerned, projecting on the tax plan the content of article 2504-bis, paragraph 3, of the civil code, in that it establishes the purposes of accounting dates before taking effect.
In this sense, the tax arrangement provides for the possibility of establishing in the Act of merging the "effects of the merger take effect from a date not earlier than the date on which ended the last financial year of each of the companies merged or incorporated or, if earlier, which ended the last financial year of the acquiring company."
As is evident, the General standard: the determination of the taxable amount for Ires (in the event that the acquiring institution is a corporation) is in any case only, noting that the merged company is, for example, a business partnership.
In the case of incorporation of partnerships by limited liability companies, uncertainties arise evidently from different taxation regime that the two models are: the consolidation of the results attributable to different corporate models could, indeed, make a tax resulting from discontinuities taxation for transparency within the meaning of article 5 of the tax code, in the case of partnerships, and total net income from taxation in accordance with article 75 of the tax code in the case of corporations.
The tax authority has in the past addressed this uncertainty in terms of circumvention, clarifying that the backdating of tax effects of fusion is basically "unenforceable" to the IRS if the aggregation is entailed in a merger by incorporation of a business partnership, subject to tax referred to in title I of the consolidation act on income taxes (Irpef) in a corporation subject, instead, to the tax referred to in title II of the tax code (Ires).
In resolution 22/E/2009, the Agency argued that position by moving the content of the preceding paragraph, the paragraph 8 of article 172, where you have that revenue from companies merged or incorporated, which covers the period between the beginning of the tax period and the date on which the merger takes effect, shall be determined "according to the provisions applicable in relation to the type of society , on the basis of the findings of relevant income ".
According to this reading, the incorporation of a partnership on the part of a corporation would be a "transformative", being in fact (with the merger) transforming partnerships incorporated; and, as in the case of transformation, article 170 requires account to be taken of "society" for the purpose of determining the ante income transformation, similarly in melting the consolidation between the results theoretically attributable to the different company could be admitted only if the same companies are subject to essentially the same sets, something that progressive fusion (heterogeneous from a tax perspective) does not take place.
Following the setting up of the Agency, it follows, therefore, that in such cases the tax rules on the merger should also coordinate with those on corporate transformation, so that each of the companies participating in the merger is required to determine the income during the period from the beginning of the tax period and the date when you produce the legal effects of the merger on the basis of the findings of relevant income statement and fulfill themselves to its declarative obligations. In this way, "elevating" i.e. the fraction of exercise before the merger to autonomous tax period – with the consideration of the "type" of companies-to ensure that the acquiring company, it would remove this autonomy with the backdating of the operation and choose "a posteriori" how taxation of income earned.
It should be noted, moreover, that although subparagraph 9 of article 172 does not distinguish between Ires and subjects personal income tax, the backdating of tax effects would result in the disapplication of the preceding paragraph 8, which total requires account to be taken of "provisions in relation to the type of society."
It is evident, in conclusion, as the two paragraphs are not very well coordinated in this regard; However, it is found within the article 172 a clear superiority of one over the other, so that in all cases of mergers "heterogeneous" from the point of view of tax law you should consider different profiles of elusiveness possibly emerging from the taxation systems, in order to avoid any disputes from tax authorities.
by Enrico Ferra
