Italy Tax Agency Clarifies Tax Treatment of Settlement Proceeds Under Preventive Composition With Indirect Continuity

The Italian Revenue Agency April 1 issued Letter No. 96/2026, clarifying the treatment of corporate income tax (IRES) and the regional tax on productive activities (IRAP) regarding settlement proceeds under a preventive composition with indirect business continuity. The taxpayer, a company in liquidation, settled a liability action against former directors, statutory auditors, and their insurers, and argued that the proceeds allocated to creditors were non-taxable due to the absence of patrimonial enrichment and its pass-through role. Upon review, the Tax Agency clarified that: 1) the proceeds were taxable for both IRES and IRAP purposes, despite their allocation to creditors, because ...