A client identified a risk in relation to an Italian PropCo they owned in connection with a historic partial waiver of a shareholder loan.

The client became aware of a historical Italian corporate income tax risk on the partial waiver of a shareholder loan. The legislation requires a notification to be made to the lending entity which states the tax value of the waived amount. Without this notification, the entire amount waived is liable to Italian corporate income tax. The client did not make the notification to the borrower entity at the time the shareholder loan was waived, however it is very common for these notifications to be missed. The waiver took place in 2019.

Given the fairly low limit, how historic the risk was and the advisors had flagged case law where the Supreme Court has recognised where the substantial requirements have been met even in the case of a missing or late submission of a formal requirement, the taxpayer should still benefit from the specific provision as set out in the legislation. We were therefore able to offer an insurance solution.