Il passaggio generazionale: la successione del know-how aziendale

Despite what is normally stated in common opinion, Italy is considered a tax haven, at least in matters of inheritance and donation taxes linked to the generational transition (as an example, note the rates for the exemption applied in relation to the degree of kinship in the following table):

However, even before explaining the reasons and the additional benefits currently in force in our system, it is useful to take a step back.

In our system the term generational transition (i.e. business succession) is defined as the passage of entrepreneurial management from one generation to the next. This is not a mere transfer of shares or positions but the much more complex and precious transfer of company know-how, the true value of the company acquired over the years.

The succession implemented in this step contributes to business continuity through adequate tax planning which presupposes the involvement of multiple factors and professionals capable of accompanying this transition and exploiting the tools and institutions provided by our legislation to protect the historical legacy of family-run businesses in our country

The first of these instruments on the subject is undoubtedly art. 3, c. IV-ter of Consolidated Law on Inheritance and Donations which exempts transfers in favor of descendants and spouses of companies or branches thereof, as well as company shares and shares, from indirect taxation.

• In the case of the transfer of shares or shares in a joint-stock company it is necessary that as a result of the transfer the buyer acquires or integrates control of the company and that he retains it for at least 5 years;
• In the case of the transfer of shares in a partnership it is necessary for the buyer to continue the business for at least 5 years. In this case, the control requirement is not necessary;
• Finally, in the event of the sale of the entire company or a business branch it is necessary for the buyer to continue operating the business for at least 5 years.

It is worth remembering here that, if you benefit from the free purchase of thecompany, it is mandatory to submit not only the succession declaration or the deed of donation but also (depending on the case) the declaration of continuation of the business for at least 5 years.

In particular, however, the additional institutions and tools functional to the facilitation or fiscal optimization of the generational transition provided for by our legal system are of interest, namely:

1. THE CREATION OF A HOLDING COMPANY

If the shareholding in the share capital meets the PEX requirements, it is convenient to transfer the shares to another Holding company as the capital gain realized is 95% exempt and therefore subject to taxation. to the extent of 1.2% - given a taxable amount of 5% for IRES at 24%.

• THE DONATION OF BARE OWNERSHIP

This institution, expressly provided for by the legislator, gives the founder the possibility of donating ownership of the company to his successor, while reserving the usufruct of the company.

With this institution, the heir is given initial access to the business activity, reserving ownership of the shareholdings to him. However, the original founder remains present as manager of the same. In this way it favors a smooth transition, allowing both the other members and external parties to gradually approach the new management.

From a tax point of view, this solution also brings advantages, first of all the possibility of obtaining a reduction of the taxable base equal to the value of the usufruct that would remain with the entrepreneur.

Furthermore, the proportionality between the value of the usufruct and the age of the entrepreneur is worthy of consideration: the younger the donating entrepreneur, the higher the value of the usufruct will be.

Finally, upon the death of the usufructuary, the consolidation of bare ownership and usufruct on the heirs will take place free of charge.

• THE TRUST

Finally, a useful tool for  generational transition of the company, is certainly constituted by the Trust.

This is an instrument with which it is possible to provide that the beneficiaries are the legitimate heirs: the Trust, in fact, provides that the Trustee cannot sell controlling interests and must manage them for a period of no less than five years following the contribution to the Trust by the settlor (entrepreneur).

Of course, the Trust is a complex tool, which does not fit all solutions. The implementation of a Trust requires a suitable period of analysis and planning of the costs linked to the management entrusted to third parties of the assets conferred therein and from which the heirs will benefit.

More in detail, for tax purposes it is noted that the dispositive deed, with which the settlor binds the assets in Trust, is a free transaction without translation effects, and therefore discounts the registration taxes (and, if there are real estate assets, the mortgage and cadastral tax) in a fixed and non-proportional amount.

Therefore, with reference to inheritance and gift tax, as reported above,  it should be noted that it is due not at the moment of the establishment of the trust deed or capital endowment, but rather following the eventual final transfer of the asset to the beneficiary.