Clarification of eligibility criteria for Participation Exemption

Recent answers Nos. 44/2022 and 64/2022 of the Italian Revenue Agency state that, in the case of convertible shares, both pre- and post-conversion months are to be considered valid for the purposes of calculating the holding period. These two documents are relevant because they show a reversal of the Agency's position with respect to the past; in particular, in its Answer No. 818 of 16 December 2021, tax authorities had argued the diametrically opposite thesis. 

The case analyzed in response No. 44/2022 is that of a Spac (special purpose acquisition company), i.e., a vehicle company aimed at raising capital by means of a listing; after the IPO, a target company is identified and an aggregation with the latter is carried out, often through a merger that allows the target company to benefit from the Spac's previous listing. 

In this type of transaction, there is the issuance of both ordinary shares (for the investors in the IPO) and special shares intended for the promoters, characterised by the absence of voting and remuneration rights but with the possibility, under certain conditions, of being converted into ordinary shares. 

The conclusion of the Revenue Agency was that the calculation of the 12 months uninterrupted holding period should also take into account the period prior to the conversion into ordinary shares, contrary to what had been affirmed on the same subject at the end of 2021.