Corporate Restructuring Italy: M&A, Mergers & Tax Guide

Italy processed 967 M&A deals worth approximately €45 billion in 2023, with active deal flow across manufacturing, healthcare, technology, luxury goods, and financial services. But Italian M&A has three compliance layers that consistently trip up foreign dealmakers: the AGCM notification thresholds that catch more transactions than anticipated, the 60-day creditor opposition window that builds inflexibly into every merger and demerger timeline, and the Golden Power review regime that expanded significantly in 2022 to cover artificial intelligence, semiconductors, and financial infrastructure — sectors where international acquirers increasingly operate.

Competitors' guides on Italian M&A cover the basics but consistently miss the CCII distressed M&A toolkit (operational since 2022), the affrancamento substitute tax rates for FY2023/2024, the D.Lgs. 19/2023 cross-border mobility framework, and the IRES premiale context for restructured Italian entities.

This guide covers the full Italian corporate restructuring toolkit: mergers, demergers, transformations, cross-border conversions, TUIR tax treatment including affrancamento, AGCM competition clearance, Golden Power review, and the distressed M&A framework under CCII. Our Milan, Rome, and Florence teams provide full deal advisory and tax structuring services for Italian M&A and cross-border restructuring.

The Italian M&A Market: Scale and Regulatory Context

Italy is the Eurozone's third-largest economy with a GDP of approximately €2 trillion. The Italian M&A market generated approximately 967 deals worth €45 billion in 2023, with particularly active deal flow in:

• Manufacturing — Italy's industrial heritage creates a deep market of established mid-size companies
• Healthcare and life sciences — regulatory environment and research infrastructure attract international acquirers
• Technology — Italian software, fintech, and deep-tech sectors have seen significant PE and strategic investment
• Luxury goods — iconic Italian brands remain acquisition targets for international luxury conglomerates
• Financial services — bank consolidation and insurance M&A continue

Foreign buyers — both private equity and strategic corporates — are active Italian acquirers. Italy's FDI stock is approximately €310 billion (Banca d'Italia / ITA Agency data). Private equity has been a significant driver of Italian mid-market deal activity, with buyout activity concentrated in industrial, healthcare, and technology sectors.

The four-regulator landscape:

Italian M&A involves up to four regulatory bodies depending on sector and acquirer nationality:

1. AGCM (Autorità Garante della Concorrenza e del Mercato) — Italian competition authority; mandatory notification for transactions above the combined €497M + €30M turnover thresholds
2. Banca d'Italia — financial sector acquisitions: banks, insurance companies, payment institutions require Banca d'Italia authorization
3. CONSOB — for publicly listed companies and securities offerings involved in M&A transactions
4. Golden Power (Presidency of the Council of Ministers, advised by MIMIT) — foreign investment screening for strategic sector acquisitions, significantly expanded in 2022

The CCII distressed M&A toolkit:

D.Lgs. 14/2019 (the Italian Business Crisis and Insolvency Code, or CCII), effective in its current form from July 2022, introduced a "composizione negoziata della crisi" — a pre-insolvency negotiated restructuring process that has increased distressed asset M&A activity. CCII provides a framework for acquiring assets from financially stressed Italian companies before formal insolvency proceedings, often at attractive pricing. This has become a meaningful source of Italian deal flow.

The non-waivable timeline constraint:

Every Italian merger and demerger involves a mandatory 30-day publication period and a 60-day creditor opposition period — these cannot be waived or shortened by agreement. All Italian M&A timelines must build in these statutory periods. For post-acquisition group reorganizations, this adds 3-4 months to any timeline that includes a merger step.

For Italian holding company structure for post-acquisition group reorganization, including PEX and domestic tax consolidation, see our holding company guide.

Italian Merger and Demerger Mechanics

Italian corporate law provides two primary reorganization tools: merger (fusione, Arts. 2501-2505-quater Codice Civile) and demerger (scissione, Arts. 2506-2506-quater Codice Civile). Both follow the same fundamental procedural framework — and both are subject to the mandatory statutory timelines that determine your deal schedule.

Italian merger types:

• Fusione per incorporazione (merger by absorption) — the most common structure; one company absorbs another; the absorbed company ceases to exist as a legal entity; all assets, liabilities, contracts, and regulatory authorizations of the absorbed company transfer automatically to the surviving entity
• Fusione propria (consolidation merger) — both companies dissolve; a new entity is created from the combination of both; less common than absorption but used for specific structural reasons

The mandatory procedural sequence — six steps:

1. Merger plan (progetto di fusione): Drawn up by all boards of the merging entities; must include the proposed share exchange ratio, transaction timetable, governance structure of the surviving entity, and effective date; filed at the Registro delle Imprese
2. 30-day minimum publication period: After the merger plan is filed, a mandatory 30-day waiting period begins before the extraordinary shareholders' meeting can be held; this period allows creditors to prepare any opposition
3. Extraordinary shareholders' meeting approval: At each merging entity; a qualified majority is required; the shareholders' resolution must be recorded and published
4. 60-day creditor opposition period: After publication of the shareholders' resolution, creditors have 60 days to file opposition in court; if a creditor files opposition and posts security, the merger must await resolution; courts rarely grant permanent injunctions but procedural delays are real and timeline extensions are the norm when opposition is filed
5. Notarial deed of merger: Executed by all parties after the creditor opposition period expires (or earlier if no opposition is filed and all conditions are satisfied)
6. Registration at Registro delle Imprese: The merger becomes legally effective from the date of registration; automatic transfer of all assets, liabilities, contracts, and authorizations

Italian demerger (scissione, Arts. 2506-2506-quater):

A demerger follows the same procedural framework as a merger. A company transfers part or all of its assets and liabilities to one or more beneficiary companies. A partial demerger transfers a business unit or defined asset pool while the original company survives. A total demerger dissolves the original company and transfers all assets to beneficiaries. Beneficiaries can be existing companies or newly formed entities. The demerger is used primarily for separating business units before a sale or for creating separate legal entities for different business activities.

Transformation (trasformazione, Arts. 2498-2500-novies):

A transformation changes an Italian company's legal form while maintaining entity identity and continuity of all existing relationships, contracts, and regulatory positions — for example, converting an SRL to an SpA, or an SNC (partnership) to an SRL. The 60-day creditor opposition period applies. Tax treatment is neutral. Used when the legal form no longer fits the company's size, governance needs, or capital market ambitions.

Total transaction timelines:

• Straightforward domestic merger (simple two-party, no regulatory clearances): minimum 4-6 months
• Complex transactions (multiple entities, regulatory clearances, Golden Power review): 8-12 months or longer

For the Italian SRL formation process — the vehicle for post-restructuring operating entities — see our company formation guide.

Tax Treatment: Mergers, Demergers, and Affrancamento

Italian tax law provides favorable treatment for domestic reorganizations — mergers and demergers are tax-neutral at the entity level by default. But the affrancamento substitute tax is the standard post-reorganization planning tool that transforms the hidden gain problem into a manageable, quantifiable cost.

Tax-neutral mergers — Art. 172 TUIR:

Italian domestic mergers are tax-neutral for corporate income tax purposes. No taxable gain or loss is recognized at either the merging or surviving entities at the time of the merger. Assets transfer to the surviving entity at their fiscal (tax) book values — the same values they carried at the transferring entity. The exchange of shares or quotas between the merging entities is also tax-neutral. Italy's merger tax-neutrality rule applies automatically — no election or formal filing is required to achieve tax-neutral treatment.

Tax-neutral demergers — Art. 173 TUIR:

The same principle applies to Italian domestic demergers. The demerger is tax-neutral at the entity level; assets transfer to the beneficiary entity at carrying fiscal values. No capital gain is recognized on the demerger itself.

Loss carryforward in mergers — the proportionality limitation:

The absorbed company's accumulated tax losses can be carried forward and used by the surviving company in the post-merger period — but only within a proportionality constraint. The usable loss amount is limited to the ratio of the absorbed company's net equity (patrimonio netto) relative to its paid-in capital (capitale versato), applied to the total loss amount. Losses exceeding this ratio are permanently forfeited at the time of the merger. This calculation must be performed before signing — the loss carryforward value is a significant due diligence item that affects transaction pricing.

Affrancamento (asset fiscal step-up) — rates and strategic use:

After a tax-neutral reorganization, the acquiring or surviving company inherits the target's low fiscal values for assets. Where market value significantly exceeds fiscal value, this creates a deferred tax liability — the "hidden gain" that will be taxable when the asset is eventually sold. The affrancamento allows the company to pay a substitute tax to align fiscal values with accounting or market values, permanently eliminating the deferred tax liability.

Affrancamento substitute tax rates for FY2023/2024:

Strategic analysis: If the acquirer expects to sell a realigned asset within 5-7 years, paying the substitute tax now eliminates the 24% IRES exposure on the full gain at disposal. The economics depend on the expected disposal timeline, the IRES rate that would otherwise apply, and the time value of the substitute tax payment. For most post-M&A structures with identifiable exit timelines, affrancamento is worth modelling.

AGCM Antitrust and Golden Power: Regulatory Clearances

Two regulatory clearance mechanisms can block or significantly delay Italian M&A transactions — and both must be assessed during deal planning, not discovered during execution.

AGCM — mandatory notification thresholds:

Pre-closing AGCM notification is mandatory and closing cannot occur without clearance if:

• The combined worldwide turnover of both parties exceeds €497 million in the preceding fiscal year, AND
• The Italian turnover of the target in the preceding fiscal year exceeds €30 million

Both thresholds must be met. Below-threshold transactions are generally not notifiable to AGCM — but AGCM retains the right to request notification if it has concerns about competitive effects in the Italian market.

Media sector exception: The Italian media sector has lower AGCM notification thresholds — sector-specific rules require notification at lower revenue levels for transactions involving television, radio, press, and online media. Always check media sector thresholds specifically for any transaction involving Italian media assets.

AGCM review timeline:

• Phase I: 30 business days from receipt of complete notification for simple clearance
• Phase II: Up to 90 additional business days if AGCM identifies serious competition concerns and opens a Phase II investigation; Phase II is initiated rarely but possible in markets with high concentration; conditions or remedies may be required for clearance

Golden Power regime (D.L. 21/2022):

The Golden Power mechanism — Italy's foreign investment screening framework — was significantly expanded in 2022. It currently covers non-EU acquisitions (and certain EU acquisitions) resulting in direct or indirect control, or a veto-capable minority stake, in Italian companies operating in:

• Defense and aerospace
• 5G telecommunications infrastructure
• Artificial intelligence and semiconductors
• Energy production and infrastructure
• Water infrastructure
• Transport infrastructure
• Financial infrastructure — including payment systems, banking, and clearing

Notification requirement: Mandatory for acquisition of control and certain significant minority stakes (above specified thresholds that vary by sector). The notification goes to the Presidency of the Council of Ministers, advised by MIMIT (Ministero delle Imprese e del Made in Italy). The government can:

• Authorize unconditionally
• Authorize with conditions (behavioral or structural remedies — for example, security commitments or operational restrictions)
• Veto the transaction entirely

EU vs. non-EU acquirers: Non-EU acquirers face the full Golden Power review with veto power available. EU acquirers may also be subject to notification requirements in covered sectors, but the government's veto power is more limited for EU-headquartered acquirers. EU FDI Screening Regulation cooperation also applies.

Deal planning implication: For any transaction where the target operates in a Golden Power sector, build 2-3 months of government review time into the transaction timeline. Engage Golden Power counsel during due diligence to assess the notification requirement, the risk profile, and any conditions that might be imposed. Surprises in Golden Power review are deal-killers.

Cross-Border Restructuring: D.Lgs. 19/2023 and EU Mobility

For EU corporate groups reorganizing their Italian operations or Italian companies restructuring their EU presence, D.Lgs. 19/2023 introduced three cross-border restructuring tools that did not previously exist under Italian law.

D.Lgs. 19/2023 (March 2023) — Italy's transposition of EU Mobility Directive 2019/2121/EU:

Three cross-border tools are now available to EU companies:

(a) Cross-border conversion: An EU company incorporated in one member state can convert into an Italian SRL (or an Italian company can convert into a company of another EU member state) without dissolution. The company retains legal identity continuity — all existing contracts, authorizations, and relationships transfer automatically. An Italian notary issues a pre-conversion certificate confirming Italian-side compliance. The conversion becomes effective from the date of registration in the Italian Registro delle Imprese.

(b) Cross-border merger: An Italian company and a company from another EU member state can merge, with either an Italian or a foreign EU entity as the surviving company. Procedural requirements from both jurisdictions apply simultaneously — Italian and home-country merger steps proceed in parallel. Employee representation rights in the surviving entity are addressed by the more protective of the two jurisdictions' employee participation laws.

(c) Cross-border demerger: An Italian company can split part of its assets and liabilities to a beneficiary entity in another EU member state (partial cross-border demerger). Alternatively, a foreign EU company can demerge a business unit into a new Italian beneficiary entity.

Employee and creditor protection provisions:

D.Lgs. 19/2023 mandates enhanced employee information and consultation requirements before any cross-border operation is implemented. Anti-abuse provisions prevent purely tax-motivated cross-border conversions where there is no genuine economic substance in the new jurisdiction. Both home-country and Italian creditors retain enhanced opposition rights.

Non-EU companies:

D.Lgs. 19/2023 does not apply to companies incorporated outside the EU. Non-EU companies cannot use the cross-border conversion or merger mechanisms under this framework. The available alternatives are: asset transfer to an Italian company, liquidation of the foreign entity and re-incorporation in Italy, or holding company restructuring. Each approach has different tax, regulatory, and timeline implications.

Timeline: Cross-border merger or conversion under D.Lgs. 19/2023 typically takes 4-8 months, with home-country and Italian procedures running in parallel.

For branch-to-subsidiary conversion under D.Lgs. 19/2023 for EU companies — including the specific Italian procedural requirements — see our branch vs. subsidiary comparison guide.

FAQ

Q: What are the main types of corporate restructuring in Italy?

The main Italian corporate restructuring tools are: merger (fusione) — absorption (one entity absorbs another) or consolidation (new entity formed from two); demerger (scissione) — partial or total transfer of assets and liabilities to beneficiary entities; transformation (trasformazione) — legal form change while maintaining identity; and cross-border operations under D.Lgs. 19/2023 for EU companies. Distressed restructuring uses the CCII composizione negoziata framework (D.Lgs. 14/2019). All procedures (except transformation) are subject to a mandatory 60-day creditor opposition period.

Q: How does an Italian company merger work?

An Italian merger requires six steps in sequence: (1) merger plan drawn up by all boards and filed at Registro delle Imprese; (2) mandatory 30-day publication period; (3) extraordinary shareholders' meeting approval at each entity; (4) 60-day creditor opposition period — creditors can file court opposition during this window; (5) notarial deed of merger executed by all parties; (6) registration at Registro delle Imprese to make the merger legally effective. Total minimum timeline: 4-6 months for a straightforward domestic merger; 8-12 months or longer for complex transactions.

Q: What are the Italian antitrust rules for M&A?

AGCM (Italy's competition authority) requires mandatory pre-closing notification when: combined worldwide turnover of both parties exceeds €497 million AND Italian turnover of the target exceeds €30 million. Both thresholds must be met. Phase I review: 30 business days from complete notification. Phase II: up to 90 additional business days if competition concerns are identified. The media sector has lower sector-specific thresholds. Below-threshold transactions are generally not notifiable unless AGCM requests.

Q: Is there a capital gains tax on company reorganization in Italy?

Italian domestic mergers and demergers are tax-neutral under TUIR Arts. 172-173 — no capital gains tax is triggered at the reorganizing entity level; assets transfer at their existing fiscal values. However, companies can elect to pay the affrancamento substitute tax (12% on realignment up to €5M; 14% on €5M-€10M; 16% above €10M) to step up asset fiscal values to market values, eliminating future capital gains exposure on those assets.

Q: Can foreign companies participate in Italian M&A?

Yes. Foreign companies can acquire Italian companies, merge with Italian companies, or restructure their Italian subsidiaries. EU companies can use the D.Lgs. 19/2023 cross-border restructuring tools — conversion, merger, and demerger. Non-EU acquirers must comply with the Golden Power regime for strategic sectors (defense, 5G, AI, semiconductors, energy, financial infrastructure) and may face government review, mandatory conditions, or transaction veto for sensitive sector acquisitions.

Planning Your Italian Restructuring Transaction

Italian M&A offers a mature and well-developed restructuring toolkit — merger, demerger, transformation, and cross-border conversion — all benefiting from automatic TUIR tax-neutral treatment at the entity level. But the 60-day creditor opposition period is non-waivable, AGCM thresholds catch transactions that advisors sometimes overlook, and Golden Power review in expanded sectors requires early engagement.

The affrancamento substitute tax analysis is standard post-reorganization planning for any Italian M&A transaction where assets carry material hidden gains — running the numbers before closing is essential.

Planning an Italian acquisition, merger, or restructuring? Book a free strategic consultation with our Milan M&A and tax team: Milan +39 02 8088 1240 | Rome +39 06 4520 7330 | Florence +39 055 264 8120 | info@company-italy.com.

This article provides general information only and does not constitute legal, financial, or regulatory advice. Contact our Italian legal team for guidance specific to your business situation.