Released on 18 August 2026 the Italian legislative decree Dlgs No. 148/2026 reshapes the rules governing the carryforward and recognition of fiscal losses generated by resident companies in cross-border mergers involving enterprises from other European Union Member States or European Economic Area countries. The new provision acknowledges that losses maturing in a foreign jurisdiction and subsequently rendered permanently unusable in the state of origin may be recognized in Italy thereby optimizing tax planning for multinational groups undergoing restructuring. To qualify the foreign subsidiary must participate in a fusion with an Italian-resident company and the loss must have become definitively unrecoverable under the origin states tax legislation with full documentation required to evidence the permanent impairment. The decree aligns Italian practice with the EU Parent-Subsidiary Directives objectives of preventing double non-taxation while simultaneously imposing stringent anti-abuse safeguards to prevent the artificial shifting of losses across borders for fiscal advantage.
Key Takeaways
- Cross-Border Loss Recognition: Italian tax law now permits the recognition of foreign fiscal losses rendered permanently unusable in the origin EU EEA state provided the loss arises from a cross-border merger involving an Italian-resident entity.
- Documentation and Anti-Abuse Safeguards: Strict evidentiary requirements apply and the decree incorporates anti-abuse measures to prevent artificial loss shifting ensuring compliance with EU state aid and domestic anti-avoidance rules.
Disclaimer:This article is compiled and summarized based on publicly available information and is for general information and academic exchange purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. For tax planning, please consult a qualified professional tax advisor or legal counsel.
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