Transfer of business and goodwill: commentary on Ordinance No. 10001 of 2024

The recent Ordinance No. 10001 of April 12, 2024, issued by the Court of Cassation, provides important clarification regarding the transfer of business and the computability of goodwill for the purpose of determining the taxable base for registration tax. This aspect is of great relevance for businesses and professionals in the legal and tax sectors, as it determines the calculation methods for the tax due in the case of a business transfer.

The regulatory context

The Ordinance is situated within the regulatory framework established by Presidential Decree 26/04/1986 No. 131, particularly Article 51, paragraph 4, which sets out the criteria for determining the taxable base for registration tax. The Court of Cassation, with this ordinance, reiterated that business goodwill, understood as the set of intangible elements that contribute to the productivity of a company, must be considered a positive component in calculating the market value of the business itself.

Transfer of business - Goodwill - Computability for the taxable base - Criteria - Operating profits - Irrelevance. In terms of registration tax related to the transfer of business, goodwill, for the purpose of determining the taxable base, falls within the determination of the market value of the business itself as a positive component, which adds to the value of the other assets that make it up in an operation that logically precedes the deduction of liabilities, without considering contingent circumstances that may have influenced the agreed consideration, such as the existence of an operating profit, since the relevant data is that of the revenues generated by the business.

Analysis of the ruling

The Court clarified that, in determining the taxable base, goodwill must be added to the value of the other assets that make up the business. This approach excludes the relevance of any operating profits, emphasizing that the significant data is represented by the revenues generated by the business. This interpretation departs from possible contingent considerations that could influence the transfer price, highlighting that the market value of the business is a fundamental element in the tax assessment.

  • The value of goodwill is an essential component of the market value.
  • Operating profits do not influence the determination of the taxable base.
  • The calculation must be made considering only the revenues generated by the business activity.

Conclusions

Ordinance No. 10001 of 2024 represents an important guide for legal practitioners and businesses that need to manage business transfers. Understanding how goodwill affects the taxable base is crucial for proper tax planning. The ruling not only clarifies technical aspects of tax legislation but also offers a useful perspective to avoid future issues during transfer. The valuation of goodwill, therefore, confirms itself as an indispensable element to consider in any business transfer operation.

Bianucci Law Firm