Commentary on Court of Cassation, ruling no. 29506 of 24\/12\/2020 \u2013 by Thomas Tassani. In www.fiscalitapatrimoniale.info<\/p>\n\n
With ruling no. 29506 of December 24, 2020, the Tax Section of the Court of Cassation defines the tax treatment, for inheritance and donation tax purposes, of allocations deriving from the family agreement, significantly correcting the conclusions reached by the same Court about two years earlier (with ruling no. 32823 of 19\/12\/2018), when it first addressed the legal issue.<\/p>\n\n
From a theoretical reasoning perspective, the Christmas 2020 ruling is flawless as it links the tax dimension with the reconstruction of the effects of the contractual tool, seeking the most accurate interpretation, both systematically and teleologically, of the provisions of Legislative Decree no. 346\/1990 (TUSD).<\/p>\n\n
From the perspective of interpretative outcomes, it is necessary to analyze (and appreciate) separately the two aspects addressed in the ruling: on one hand, the ordinary taxation of allocations to non-beneficiary heirs; on the other hand, the scope of application of the favorable regime provided for in Article 3, paragraph 4-ter, TUSD<\/p>\n\n
In the judgment under review, the Italian Supreme Court first examines the ordinary tax treatment to be applied, for gift tax purposes, to the transfers that the assigned forced heir is required to make\u2014ex lege and by virtue of the agreement entered into\u2014in favor of the non-assigned forced heir.<\/p>\n\n
In order to identify the applicable tax provisions, the Court considers it (correctly) necessary first to define the causal and, above all, the substantive effects of such transfers.<\/p>\n\n
A similar analytical approach had already been adopted in the previous decision no. 32823\/2018 (referred to several times in the judgment under review), with outcomes that were, at least with respect to these specific aspects, entirely analogous.<\/p>\n\n
According to the Italian Supreme Court, the entire contractual transaction requires a \u201cunitary reading\u201d of the family business succession agreement (and, therefore, of the various transfers carried out thereunder) \u201cwithin the proper framework of gratuitous transfers.\u201d Through this instrument, a gratuitous transfer is made in favor of the assignees, producing at the same time effects of \u201canticipation\u201d with respect to the \u201copening of the succession\u201d of the entrepreneur, as well as effects of \u201cdivision among the forced heirs.\u201d<\/p>\n\n
The Tax Chamber not only demonstrates a sound command of civil law theories relating to the family business succession agreement, but\u2014more appreciably, in our view\u2014chooses not to privilege one theoretical reconstruction over another, instead favoring a synthetic approach capable of highlighting the various dimensions of the institution: gratuitous intent, anticipatory succession effects, division, and even settlement-related aspects.<\/p>\n\n
Within this framework, the Italian Supreme Court observes that \u201cwhat characterizes the family business succession agreement, and distinguishes it from any donation involving the same assets, is the necessary presence of a compensatory payment in favor of the other forced heirs, immediately enforceable, coupled with the impossibility of subjecting the transfers thus effected to collation and reduction.\u201d<\/p>\n\n
With specific reference to the obligation of compensation imposed on the assignee forced heirs (to be fulfilled in cash or in kind), the judgment is unequivocal\u2014consistent with the December 2018 precedent\u2014in accepting that such obligation constitutes a charge arising ex lege. Indeed, \u201cfrom the standpoint of its effects, the presence of such an obligation amounts to a burden weighing on the transfer effected through the family business succession agreement, entirely comparable to what occurs in the case of a gratuitous transfer subject to a charge.\u201d<\/p>\n\n
Accordingly, the transfer from the transferor to the assignee must be classified, as regards its legal effects, as a donation subject to a charge; the difference instead concerns the moment at which the modus is imposed, which in the case of the family business succession agreement has a statutory (rather than contractual) source and constitutes a necessary (rather than accidental) element of the transfer.<\/p>\n\n
As with a donation subject to a charge, the burden \u201cdoes not constitute consideration for the transfer received, but rather reduces it, satisfying other interests of the transferor and of the third parties who are the beneficiaries of the performance.\u201d<\/p>\n\n
As stated, the conclusion to consider the attribution of the disposer in the family pact as a modal donation was already contained in the 2018 judgment, although the reasoning in the judgment being commented on has a greater theoretical depth, showing great clarity and consistency of thought.<\/p>\n\n
The point where, however, the judgment of Christmas 2020 does not follow the 2018 judgment, constituting a real interpretative reversal, is the issue of tax consequences.<\/p>\n\n
In 2018, the Court had stated that the execution of the burden, by the assignee in favor of the legitimist, must be subject to tax “based on the rate and the exemption related not to the relationship between the disposer and the assignee, nor to the relationship between the disposer and the legitimist, but to the one between the assignee and the legitimist.” As if it should be considered, for tax purposes, as a donation from the assigned legitimist to the non-assigned legitimist.<\/p>\n\n
With the judgment in question, the solution is instead [opposite], considering the liquidation “for tax purposes, a donation from the disposer to the non-assigned legitimist, with the consequent attribution of the rate and the exemption provided concerning the corresponding family or marital relationship.” The liquidation must therefore be treated as a donation from the disposer to the non-assigned legitimist, carried out through the burden on the assigned legitimist.<\/p>\n\n
The Supreme Court reaches this interpretative result based on a detailed examination of the provisions of the TUSD.<\/p>\n\n
As stated in the judgment, “the entire system of inheritance and donation tax highlights the principle that the wealth increase (and thus the taxable amount) for the heir and legatee is reduced by the amount of legacies and burdens imposed on them.”\n<\/p>\n\n
At the same time, the “burdens placed on the beneficiary of the attribution and in favor of other individually determined subjects, for tax purposes, are considered as attributions coming, respectively, from the decedent or the donor.”<\/p>\n\n
The relevant articles are 8, paragraph 3, and 46, paragraph 3, TUSD; specifically, concerning donations, article 58, paragraph 1, which states that “the burdens imposed on the donation, which involve performances to third-party beneficiaries, are considered donations in favor of those beneficiaries.” Moreover, article 2, paragraph 49, Legislative Decree 262\/2006 is clear in considering the modus in favor of a specific person as another donation.<\/p>\n\n
In essence, the burden is an element that, on the one hand, “reduces” the direct attribution to the beneficiary (thus reducing the taxable base), and on the other, highlights an indirect attribution to another subject (which is subject to taxation on its own).<\/p>\n\n
This general paradigm of modal attributions (whether inter vivos or mortis causa) must also apply to attributions arising from the family pact, since, on this point, the judgment is clear: “the legal effect is entirely similar to the imposition of a burden”; “for tax purposes, therefore, the family pact is subject to the tax regime applicable to modal donations.”<\/p>\n\n
Consistent with this theoretical approach and correcting an evident conceptual error in the 2018 judgment, the Supreme Court now states that the liquidation in favor of the non-assigned legitimist “must be considered, for tax purposes, as a liberal gift from the entrepreneur to the non-assigned legitimaries.”<\/p>\n\n
The judgment clarifies that this tax assessment cannot change due to the observation that the liquidation “is executed by the beneficiary of the transfer with his own money or goods (or that have become his).”<\/p>\n\n
This passage might seem superfluous or difficult to understand, given that in the logic of the family pact, the subject who must liquidate the non-assigned legitimist is the assigned legitimist, not the disposer. However, this is explained by the fact that the 2018 ruling seemed to consider the financial movement between the assignee and the legitimist as significant in determining tax treatment as a donation between these two subjects.<\/p>\n\n
Thus, the Supreme Court has rightly emphasized this aspect.<\/p>\n\n
Just as it is important that the judgment being commented on has highlighted that the solution adopted is entirely in line with the tax treatment that would apply in two alternative but legally comparable scenarios. These scenarios are: if the entrepreneur decided to dispose of the company or shares by will, appending the burden on the heir or legatee to liquidate the other legitimaries; or if the entrepreneur disposed of the assets of the company and, after the succession opened, the legitimaries entered into an agreement to reintegrate the legitimate shares; in both cases, the legal results would be analogous to those determined by the family pact, and the same tax regime would need to be defined.<\/p>\n\n
Once the scope of relevance, for gift tax purposes, of transfers in favor of non-assigned forced heirs has been defined, the judgment turns to the distinct issue of whether such transfers may fall within the exemption regime provided for under Article 3, paragraph 4-ter, of the Inheritance and Gift Tax Code (TUSD). The application of the preferential provision would result in the complete exemption from taxation, as opposed to the ordinary regime which, as noted, is based on a 4% tax rate on amounts exceeding the EUR 1,000,000 exemption threshold.<\/p>\n\n
The provision at issue exempts from taxation the transfer of business enterprises or shareholdings in partnerships, or controlling shareholdings (in the case of companies limited by shares), provided that the donee undertakes, in the deed itself, to continue the business activity or, in any event, to retain the shareholdings or control of the company for a period of no less than five years.<\/p>\n\n
According to the prevailing scholarly view, the preferential regime should apply to all transfers effected under the family business succession agreement: both those made directly by the transferor to the assignee, and those made indirectly in favor of the non-assigned forced heirs. Two principal arguments support this conclusion.<\/p>\n\n
First, on the basis of a unitary consideration of the entire contractual arrangement, which performs an overarching gratuitous and succession-related function, in which the transfers and compensatory payments in favor of the forced heirs appear inextricably linked to the assignment of the business and the shareholdings.<\/p>\n\n
Second, in light of the broad underlying purpose of Article 3, paragraph 4-ter, TUSD, which also stems from specific European policy initiatives (Commission Recommendation of 7 February 1994; Commission Communication of 28 March 1998) aimed at safeguarding a particularly delicate phase in the life of businesses\u2014especially small and medium-sized enterprises\u2014namely, generational succession. If the family business succession agreement were to be \u201cdisaggregated\u201d by distinguishing, for exemption purposes, the transfers to the assignees from the sums indirectly attributed to the other forced heirs, the objective of the relief would be frustrated, introducing the effects of ordinary (and burdensome) taxation for certain segments of the overall transfer.<\/p>\n\n
The substance of the relief, in fact, lies in exempting from taxation the \u201ctransfer\u201d of businesses or shareholdings, understood as the \u201cenrichment\u201d corresponding to the value of the businesses or controlling interests transferred (FEDELE, Fiscal Profile of the Family Business Succession Agreement, Riv. dir. trib., 2014, 526 ff.).<\/p>\n\n
Within the logic of the family business succession agreement, the enrichment resulting from the transfer of shareholdings does not accrue solely to the assignee (or the \u201cprincipal\u201d assignee), but must also encompass the transfers due ex lege to the forced heirs.<\/p>\n\n
If the transfers in favor of forced heirs were deemed to fall outside the scope of the exemption, this would result in only a partial exemption, in breach of both the spirit and the letter of the statutory provision.<\/p>\n\n
Notwithstanding the theoretical robustness of the arguments outlined above, the Italian Supreme Court has adopted a restrictive interpretation of the provision at issue, holding that only direct transfers of businesses and shareholdings\u2014namely, those from the transferor to the assignee\u2014are eligible for the exemption.<\/p>\n\n
The Italian Supreme Court emphasizes the literal wording of the provision, observing that it makes \u201cno reference whatsoever to compensatory payments made in favor of non-assigned forced heirs,\u201d and justifies this \u201cstrict interpretation\u201d by reference to the preferential nature of the provision.<\/p>\n\n
This represents the least persuasive part of the judgment, for the reasons outlined above and because, ultimately, the European relevance of the legislative intervention itself\u2014acknowledged in the judgment but, in our view, not adequately reflected upon at the interpretative level\u2014should have led to the opposite conclusion.<\/p>\n","protected":false},"excerpt":{"rendered":"
Commentary on Court of Cassation, ruling no. 29506 of 24\/12\/2020 \u2013 by Thomas Tassani. In www.fiscalitapatrimoniale.info Introduction: family agreement tax regime With ruling no. 29506 of December 24, 2020, the Tax Section of the Court of Cassation defines the tax treatment, for inheritance and donation tax purposes, of allocations deriving from the family agreement, significantly […]<\/p>\n","protected":false},"author":1,"featured_media":3712,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[24],"tags":[22],"class_list":["post-3714","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-family","tag-taxation"],"_links":{"self":[{"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/posts\/3714","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/comments?post=3714"}],"version-history":[{"count":2,"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/posts\/3714\/revisions"}],"predecessor-version":[{"id":3828,"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/posts\/3714\/revisions\/3828"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/media\/3712"}],"wp:attachment":[{"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/media?parent=3714"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/categories?post=3714"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/notaiopadova.it\/en\/wp-json\/wp\/v2\/tags?post=3714"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}