Italy Tax Agency Clarifies Assessment of R&D Tax Credit Upon Merger by Incorporation

The Italian Revenue Agency Dec. 31, 2020 posted online Letter No. 643, clarifying the transfer and use of R&D tax credits upon a merger by incorporation. A company merged with another company, with the newly formed company taking ownership of R&D tax credits of the merged company. The new company inquired as to whether the transfer and use of the credits for income tax and regional tax payments would violate anti-avoidance provisions. The agency clarified that: 1) credit transfers are generally allowed as part of the sale of a business unit; and 2) the credits in question were carried forward ...