Edited by Maurizio Pavia, Mattia Bestetti
Background
With the public Answer to Ruling No. 97/2026, the Italian Tax Authority provided certain clarifications on the commerciality requirement set forth under Article 87, paragraph 1, letter d), of the Italian Consolidated Income Tax Act (“TUIR”) for the purposes of applying the participation exemption regime (“PEX”) to the capital gain arising from the disposal of participations in three special purpose vehicles (the “Beta Companies”) operating in the electricity storage sector through Battery Energy Storage Systems (“BESS”).
Facts
The taxpayer (“Alfa”), an operating holding company, held 100% of the quota capital of the Beta Companies, which had been incorporated in March 2024. In April 2024, the Beta Companies acquired from the entity Gamma — also controlled by Alfa — three projects for the construction of BESS systems (the “Bess Projects”), which were at a preliminary stage of development, originally initiated by Gamma.
The Beta Companies stepped into the project initiatives, with Gamma undertaking to assist them in completing the development process and transferring the relevant permits and authorizations.
Once the BESS Projects reached “Ready to Build” status, Alfa disposed of its interests in the Beta Companies, realizing a capital gain.
The Italian Tax Authority’s Position
According to the answer provided for by Italian Tax Authority, the commerciality requirement was not met at the level of the Beta Companies, with the consequence that the capital gain arising from the disposal of their participations could not benefit from the PEX regime.
After recalling the applicable legal and administrative framework, the Italian Tax Authority underlined that, pursuant to Circular No. 7/E of 2013, the commerciality requirement is generally satisfied where the company whose participations are sold has an operational structure suitable for the production and/or sale of goods or services, or has the capacity — even if only potential — to meet market demand within the timeframes reasonably expected in light of the specificities of the relevant economic sector.
The Italian Tax Authority further recalled that, with respect to companies operating in the energy industry, Circular no. 7/E of 2013 clarified that the set of activities relating to financing operations, site selection, design and construction of plants — within the context of authorization procedures for the construction and operation of energy infrastructures declared to be of public interest or public utility — does not have a merely preparatory nature, but rather immediately constitutes the implementation, albeit partial, of the company’s corporate purpose.
The Answer no. 97/2026 also adds (even if such condition was not contemplated – for companies operating in the energy sector – in the aforementioned Circular No. 7/E of 2013) that it is in any event necessary “that the disposed company has an operational structure potentially capable of commencing the production process within a reasonable timeframe.”
Turning to the case at hand, in a nutshell, the Italian Tax Authority first objected that the Beta Companies did not appear to have “the capacity, even if only potential, to meet market demand within the timeframes that may reasonably be expected given the specificities of the relevant economic sectors.“
Furthermore, as regards the preparatory activities, the Italian Tax Authority objected that such activities had in fact been carried out by another entity. Specifically:
- the Bess Projects were entirely designed and developed by Gamma, which carried out the preparatory studies, the site selection, the obtainment of the Single Authorizations and the grid connection requests to the National Transmission Grid (RTN), subsequently transferred to the Beta Companies;
- the development of the projects was outsourced, through a framework agreement, to a third-party company, under a contract originally entered into for the benefit of Gamma and later assigned to the Beta Companies, such that these latter did not carry out any significant development activities.
In addition, the taxpayer had failed to provide information regarding the financing arrangements and the expected timeline for the construction and commissioning of the facilities.
In a nutshell, while reaffirming that start-up activities in the energy industry are per se capable of qualifying as business activity even during the initial development phase, the Italian Tax Authority underlined that such activities should be “directly” attributable to the company whose participations are sold, which should in any event have the capacity to operate within “reasonable” timeframes.
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