Benefit Corporations: first signals of attention from the Tax Authority

Prepared by: Fabio Alberto Regoli, Alessio Rolando, Alessandro Maffiodo, Vittoria Rostagno and Isabelle Roccazzella

As we know, Italy is the first, and the only, European country which has recognized a legal status to the Benefit Corporations (art. 1, paragraphs 376-383 and annexes 4 – 5 of Law No. 208/2015, the so-called “Legge di Stabilità 2016”).

The distinctive feature of a Benefit Corporation is the pursuit of a public benefit aimed at having a specific impact over one or more categories of stakeholders, purpose that is added to the traditional company’s purpose resulting by the exercise of the business activity.

The Italian discipline on Benefit Corporations does not provide for exceptions to the general rules on corporate law, but introduces specific requirements that the Benefit Corporations must comply with in relation to:

  • the corporate organization (i.e., the Legge di Stabilità 2016 provides that the specific purposes a Benefit Corporation intend to pursue must be expressly described within the company’s purpose), and
  • corporate governance.

With regard to corporate governance, the directors of a Benefit Corporation have specific duties in addition to the traditional ones generally provided for each company type by the Italian Civil Code.

In details, the directors of a Benefit Corporation shall:

  • balance the company’s and the shareholders’ interests with the interests of the stakeholders as listed in art. 1, paragraph 376, Legge di Stabilità 2016 (i.e.: people, communities, territories and environment, cultural and social assets and activities, entities and associations and others) and, at the same time
  • pursue a public benefit, in compliance with the relevant provisions of their article of association,
  • identify one or more individual or entity to be entrusted with roles and tasks in order to pursuit the public benefit purposes, and
  • prepare an annual report, to be annexed to the financial statements, on the activities carried out in order to pursue the public benefit and on the methods by which they have balanced the interests of the shareholders and those of the other stakeholders, as well as on the specific missions of the company.

In addition, Italian law stipulates that, in the event of failure to pursue the public benefit, the company may be sanctioned by the Italian Antitrust Authority (“AGCM”) for the violation of the rules on misleading advertising (Legislative Decree No. 145/2007) and the Consumer Code (Legislative Decree No. 206/2005).

The purpose of this provision is to ensure the fairness and truthfulness of the market disclosure concerning the existence of a company which really pursues goals other than those of its shareholders and to prohibit companies which do not actually achieve such goals from benefiting of a commercial advantage over other companies, as well as from intentionally misleading consumers.

Until the adoption of the Covid19 emergency legislation, the only advantages deriving from the establishment of a Benefit Corporation were exclusively reputational.

Taking into account the new emergency regulatory framework and the increased focus on sustainability issues, a minimal but noticeable track has been marked in terms of tax benefits with regard to the establishment of and the transformation (of an already existing company) into a Benefit Corporation.

The newly introduced art. 38-ter of Legislative Decree 34/2020, as amended by Law 77/2020, which provides for a tax credit on the costs of incorporation and transformation into a Benefit Corporation, renewed the interest of operators for this type of company.

The tax credit, envisaged in the amount of 50%, is related to incorporation and transformation costs, these latter related to the costs incurred for changes necessary to the By-Law to transform existing companies into Benefit Corporations. These costs, such as notary fees, taxes, charges and consultancy for the incorporation phase should therefore be related both to companies that are incorporated as Benefit Corporations and to those that are transformed into this kind of company following an amendment of the By-Law.

The tax credit can be used to offset other payments due through the F24 form, starting from January 1st, 2021.

Based on the original provision of the law, the eligible expenses must have been incurred during the period from July 19th, 2020 (date of entry into force of the Law 77/2020) to December 31st, 2020. The tax relief is granted within the allocated amount of 7 million of Euros. It is also envisaged that the tax credit is granted in compliance with the conditions and limits of European legislation on state aid (so-called “de minimis”).

In addition, art. 38-ter, paragraph 3, of Law 77/2020 provides for an endowment fund (for a total of 3 million of Euros) for the year 2020, aimed at promoting the Benefit Corporations.

With reference to the timing of the tax credit, art. 12, paragraph 1-bis, of the Milleproroghe Decree (Legislative Decree 183/2020), as inserted by the related conversion law, provides for the extension of this relief until June 30th, 2021. Such extension, also taking into account the emergency situation, will allow a wider audience of profit companies, with greater social sensitivity, to invest in the performance or in the financing of the activities carried out by the Benefit Corporations.

As regards the practical implementation of the tax relief, we are still waiting for the specific ministerial decree which should have been enacted in the following 90 days from the entry into force of the Law 77/2020.

Given the above, it is clear that ESG matters, in a broader sense, are beginning to be considered by the Italian Tax Authority.

Let’s Talk

For a deeper discussion, please contact:

Alessio Rolando

PwC TLS Avvocati e Commercialisti


Fabio Alberto Regoli

PwC TLS Avvocati e Commercialisti

Of Counsel