The transfer of the renewable energy plant is often the subject of tax disputes as contracts for the sale of assets are re-qualified by the Italian Tax Authority as transfers of (branches of) business for the purposes of indirect taxation.
It should be remembered that pursuant to art. 2555 of the Civil Code: “The company is the complex of assets organized by the entrepreneur for the exercise of the business“.
The difference for indirect tax purposes is as follows.
In the case of assets’ transfer:
- the consideration for the transfer is exempt from VAT if certain conditions are met;
- registration tax is paid in a fixed amount (200 euros);
- mortgage tax (3%) and land registry tax (1%) are paid on the value of the property sold.
In case of going concern’s transfer:
- the consideration is excluded from the scope of application of VAT (article 2, paragraph 3, letter b, Presidential Decree no. 633/72);
- registration tax on capital transfers is normally 3% unless there are different rates for the individual assets transferred, i.e. the highest rate if no separate consideration has been agreed upon;
- mortgage and land registry taxes are paid in a fixed amount totalling 100 euros.
The jurisprudence seems to be inclined to consider the renewable sources plant’s transfer as an assets’ transfer.
Different second instance judgments agree that the transfer of authorized projects, intellectual property rights, clearances, permits, applications and licenses shall be considered as assets’ transfer. More specifically, according to the mentioned jurisprudence, the absence of photovoltaic panels and of surface rights (that are assets inseparably connected to each other for production purposes) entails the impossibility to consider the operation as a going concern’s transfer.
This jurisprudence represents a useful evaluation tool to verify, from time to time, the correct qualification of the single transfer. In Italy it is increasingly common to witness partial transfers or only of the real estate part (the fund, technical premises, foundations, etc.) or only of the movable part (panels, inverters, etc.).
It is therefore necessary to evaluate each single case, but the going concern’s transfer cannot be excluded in case the plant’s transfer goes together with transfer of some contracts and authorizations.
Preventive evaluations to avoid findings
During the operation’s setting it is therefore important to carefully evaluate the nature of the transfer in order to prevent both re-qualification by the Italian Tax Authority and further liability on the part of the purchaser: consider, for example, that in the case of going concern’s transfer, the purchaser is liable for the debts prior to the transfer that result from the accounting books.