Italian companies with an annual turnover of more than €50 million will be required to pay a “competition tax” regardless of whether they undertake or notify mergers.
The law, which comes into effect at the start of next year, will put an end to merger filing fees. However companies caught by the tax must pay 0.008 percent of their annual turnover up to a €400,000 cap.
The Italian Competition Authority (ICA), who will receive this new funding, clarified the details of the fee last week.
The tax changes could be a big blow for fund managers with Italian companies in their portfolios as the ICA stated the fee will apply to all subsidiaries of foreign groups registered in Italy with turnover in excess of the €50 million threshold.
The ICA will use a company's aggregate worldwide revenues of the last financial year to work out if the threshold has been met. Any Italian company part of a parent group must pay, on annual basis, the competition tax if its individual aggregate revenue is above the threshold.
“Unsurprisingly, it has been roundly criticised as yet another disguised trade tax on companies doing business in Italy. It is a further factor which will need to be considered by companies deciding whether to acquire undertakings active in Italy,” according to a client memo from law firm Herbert Smith.
The move follows the European trend of increasing the cost of merger fees with both Spain and the UK hiking up the cost of filing.