In Italy, shell companies or non-operating companies (società di comodo or società non operative) are companies that have no or very little operating activity over a long period of time, even though they have significant assets (e.g. real estate, shareholdings, financial investments).
The regulation is based on Art. 30, Law No. 724/1994, and was last amended as part of the tax reform (Law No. 192/2024 – "Revisione IRPEF/IRES"). The aim is to combat abusive arrangements in which companies primarily serve as "asset shells" for their shareholders.
Who is affected?
This regulation on shell companies basically affects:
- Corporations (Ltd., Stock corporation, Partnership limited by shares)
- Partnerships (Ordinary Partnership, Limited partnership)
- Non-resident companies and corporations with a permanent establishment (branch) in Italy
Operational test
Whether a company is considered non-operational is determined using the so-called operational test:
- The arithmetic mean of the actual declared revenues, inventory increases and other ordinary income for the last three years (current year + two previous years)
- is compared with the presumed minimum income.
Result:
- If the actual revenues are below the presumed minimum revenues, the company is considered a shell company or a non-operating company.
- In this case, special tax consequences apply (minimum taxation, limitation of loss carryforwards, restrictions on VAT credits).
Calculation of minimum income
The presumed minimum income is determined by applying specific percentages to the average value of certain asset items. These include in particular:
- Security papers, shareholdings and financial receivables
- Real estate (including leased properties)
- Other tangible and intangible capital goods, investment goods, fixed assets (e.g. machinery, trademarks)
The average value is calculated based on the current financial year and the two previous financial years.
With the tax reform (Law No. 192/2024), the coefficients for minimum income and minimum revenue were largely halved from the 2024 taxation period onwards. The following percentages are used to calculate minimum income:
- 1% on shareholdings, security papers, commercial paper and financial receivables
- 3% on other real estate
- 2.5% on properties in cadastral category A/10 (offices)
- 2% on residential properties acquired or revalued in the current year or in the two previous years
- 0.5% on all properties in municipalities with fewer than 1,000 inhabitants
- 6% on commercial vessels
- 15% on other fixed assets (e.g. machinery, business equipment).
Tax consequences of a shell company
If a company is considered a shell company (società di comodo), it must:
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pay tax on a minimum income calculated on a flat-rate basis from its assets, even if the actual result is lower. The following percentages (also reduced as part of the tax reform) apply to the calculation of this minimum income:
- 0.75% on shareholdings, security papers, financial receivables
- 2.38% on other real estate
- 2% on real estate in cadastral category A/10 (offices)
- 1.5% on residential property acquired or subject to a revaluation in the current year or in the two previous years
- 0.45% on all properties in municipalities with fewer than 1,000 inhabitants
- 4.75% on commercial vessels
- 12% on other fixed assets (e.g. machinery, business equipment)
- as a corporation, pay an IRES surcharge of 10.5% on this minimum income
- determine a minimum tax base for IRAP
- offset losses from previous years only against that part of income that exceeds the minimum income.
Value added tax (IVA)
For companies classified as non-operational, VAT credits are subject to severe restrictions on their use: they cannot be refunded or offset horizontally against other taxes, but only against future VAT (vertical offsetting). In addition, if the company remains non-operational for several years, the further use of the credit may also be restricted.
Exemption
In certain cases, the regulation on shell companies does not apply. Automatic grounds for exclusion exist, among other things, for:
- the first financial year
- companies with at least 50 shareholders
- companies with a permanently high number of employees (at least 10 employees)
- companies against which bankruptcy proceedings have been initiated
- companies whose total operating performance (item A P&L) exceeds their assets
- companies with a high reliability index (ISA) or that have agreed to a tax settlement in advance (Concordato preventivo biennale – CPB).
In addition, there are grounds for non-application, for example in the case of real estate that is leased to public institutions or subject to strict rent controls, certain holding companies or companies in advanced liquidation.
Interpello (application for suspension)
A so-called "Interpello" can be used to apply to the revenue agency for suspension of the regulation for a specific year. However, Law 219/2023 has severely restricted this option.