ITALY Law and Practice Contributed by: Paolo Balboni, Luca Bolognini, Giulio Monga and Carmine Antonio Perri, ICT Legal Consulting
or remain as minority shareholders. Full 100% sales are common in trade sales to strategic buyers, but investors often retain flexibility to remain invested if further growth potential exists. 4.3 Liquidity Event: Form of Consideration In general, the prevailing trend in Italy remains cash transactions (particularly in the sale of privately held technology companies) due to regulatory simplicity and investor preference for immediate returns. Stock- for-stock or mixed consideration (cash and shares) is less common but may be used in strategic acquisi- tions, especially when the buyer is a listed or interna- tional group seeking to align interests and retain key shareholders or management. 4.4 Liquidity Event: Certain Transaction Terms In Italy, founders typically stand behind key repre- sentations and warranties, while VC investors limit their liability to title and authority matters. Escrow or holdback arrangements (5–15% of the price for 12–24 months) are customary to secure indemnities. R&W insurance is increasingly used in larger deals but remains uncommon in early-stage transactions due to cost. Overall, parties aim for a clean exit structure with balanced risk allocation. Spin-offs represent a growing and strategic tool in Italy for fostering innovation and scaling technology-driven ventures. In fact, spin-offs are increasingly common in Italy’s technology industry, particularly among uni- versities, research centres and established corporates seeking to commercialise innovative projects. They are typically used to separate high-growth or non-core business lines, attract dedicated funding, or create a more agile vehicle for innovation and collaboration with external investors. 5. Spin-Offs 5.1 Trends: Spin-Offs Key drivers include access to venture capital, strate- gic focus, and regulatory or governance simplification, especially where innovation activities differ from the parent company’s core operations. Spin-offs are also encouraged by national and EU innovation policies, which promote technology transfer and commerciali-
sation of research through dedicated start-up vehi- cles. 5.2 Tax Consequences Spin-offs in Italy can be structured as tax-free at both the corporate and shareholder levels if certain con- ditions are met (see Articles 173–176 of the Italian Income Tax Code). The transaction must be propor- tional and undertaken for valid business purposes, and shareholders must receive shares in the spun-off company in the same proportion as their existing hold- ings. Proper accounting and disclosure requirements must also be observed. When these requirements are satisfied, no immediate corporate or shareholder taxa- tion applies. 5.3 Spin-Off Followed by a Business Combination In Italy, a spin-off can be immediately followed by a business combination, such as a merger or acquisi- tion. Key requirements include proportionality, valid business purpose, and maintenance of tax-neutral treatment, along with shareholder approvals and reg- istration formalities. Proper disclosure to creditors and minority shareholders is also required. When struc- tured correctly, this approach allows strategic restruc- turing while preserving tax efficiency. 5.4 Timing and Tax Authority Ruling The typical timing for a spin-off in Italy depends on the complexity of the transaction and the need for approv- als, but most corporate spin-offs can be completed within 3–6 months from board approval to registration with the Companies’ Register. More complex or multi- entity spin-offs may take longer, particularly if creditor notifications or shareholder meetings are required. A tax ruling from the Italian Revenue Agency ( Agenzia delle Entrate ) is not mandatory but is often sought to confirm tax-neutral treatment at both the corporate and shareholder levels. Obtaining such a ruling gen- erally takes 3–6 months, depending on the clarity of the transaction structure and the completeness of the documentation provided.
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