The registration tax on pledges of Srl stocks granted to guarantee the obligations of third parties, does not find uniform application between the different Offices of the Italian Revenue Agency.
The issue is brought back to attention following an extremely recent Circular of the Public Notary Board of Milan (n. 7/2016) which has signaled the liquidation from the Italian Revenue Agency of the registration tax for the act of constitution of a pledge on the stocks of an Srl using as taxable basis the sum guaranteed with the pledge and not the nominal value of the stocks.
This interpretation diverges from the one generally adopted till now from the majority of the Offices of the district.
The recent position of the Italian Revenue Agency
With regards to the liquidation of the registration tax, the Agency has clarified that the law treatment for guarantees on Srl stocks differs from the one for guarantees granted on cash or on shares (art. 43, paragraph 1, letter f), Presidential Decree 131/1986). Shares, in contrast with the stocks of an Srl, have a nominal value objectively suitable for the determination of the taxable basis.
The difference between stocks and shares
Based on art. 43, paragraph 1, letter f) of the Presidential Decree 131/1986, the taxable basis for the registration tax on acts with which in rem security (garanzia reale) or personal guarantee (garanzia personale) is granted, is constituted by the sum guaranteed. Differently, if the guarantee is granted on cash or shares, the taxable basis is constituted by the sum of cash or the value of the shares, if inferior to the sum guaranteed.
The controverted profiles relative to the application of the tax derive precisely from the literal expression of the provision that limits the possibility to consider the amount of the sum guaranteed only in case of guarantees regarding cash or shares.
In an Srl the stock of participation represents the fraction of the capital relative to each stockholder that, generally, corresponds to the contribution operated. The stock is considered an immaterial moveable good and, basing on the law, it does not have a nominal value and does not necessarily have a minimum value. In other words, the stock is the fraction of the capital that varies in time in consequence of the variation of the capital.
Stocks remain distinct from shares which represent, instead, a financial instrument of use of capital.
In particular, a share is a title representative of an ensemble of rights and obligations of the shareholder whose length depends on the category of shares from which the possessed share comes from.
In consideration of such distinction and on evidence of the fact that stocks are not title shares, for the determination of the registration tax the taxable basis cannot be constituted by the value of the stocks, but will always result equal to the sum guaranteed.
It is evident that such distinction determines a discrimination of treatment between pledges on stocks and pledges on shares, even with regards to the same type of act. For this same reason, in an LBO operation in which the NewCo is an SpA the act constituting the pledge, in case it were to be subjected to taxation, would require the application of the tax on the value of shares.
Instead, a NewCo constituted as an Srl, would require the application of the registration tax based on the value of the sum guaranteed.
To overcome such discrimination of treatment, some Offices, giving a systematic interpretation of the provision, have applied extensively the provisions for titles to stocks, but, presently, we cannot exclude that the Italian Revenue Agency may opt for a more literal interpretation of the provision.
Until an intervention to amend art. 43 is made, it cannot be excluded that the Italian Revenue Agency in case of pledges on stocks will use the sum guaranteed as taxable basis of the registration tax.
What we recommend to our clients
All the above considered we recommend our clients to evaluate the risk of increased obligations and to evaluate the option of the substitutive tax in case of financing with guarantees.