Deferring tax on dividends at holding-company level is inherent in the system for as long as it remains temporary: the risks arise when profits sit still sine die, with no investment plan behind them.
Tax audits over recent months have put the spotlight on “static” holding companies, those that keep within themselves the profits received from the operating companies without either reinvesting them or distributing them to the shareholders.
When the dividend moves up from the operating company to the holding company, the effective charge is 1.2% (IRES, Italian corporate income tax, at 24% on a taxable base of 5%, Article 89 TUIR – the Italian Income Tax Code), against the 26% withholding that an individual shareholder would have borne. This deferral is regarded as inherent in the system – and therefore lawful – for as long as it remains temporary; where, on the other hand, profits are retained over medium to long horizons, the postponement of IRPEF (Italian personal income tax) risks becoming sine die and amounting to abuse of law under Article 10-bis of Law 212/2000. The policy statement (Atto di indirizzo) issued by the Italian Ministry of Economy and Finance on 27 February 2025 expressly includes deferrals of taxation among tax advantages, provided they are postponements sine die or significantly deferred, and not merely temporary.
In the audits currently under way, the deferral is being challenged even for dividends transferred to the holding company in very recent years (2024-2026), for which by definition no period of time has elapsed that would allow the postponement to be classed as non-temporary. Audits may also take issue with the investment of the liquidity in financial instruments that the individual shareholder could have subscribed for directly.
Not even the strictest readings have ever asserted that a holding company is forbidden to retain the dividend, nor is there any obligation to redistribute it immediately to the shareholder: no rule in the Italian legal system supports such a constraint. On the contrary, the holding company is a vehicle the system positively encourages – consider the controlled-realisation contribution under Article 177(2) and (2-bis) TUIR – precisely in order to rationalise investment and keep capital within the business tax regime. It is entirely normal for resources to remain temporarily “parked” in a securities account pending an investment consistent with the group’s strategy; the distribution of profits remains the natural destination laid down by the company contract (Article 2247 of the Italian Civil Code), but with no requirement of immediacy.
Given the restrictive stance emerging from audit practice, when new holding companies are set up it is advisable to state expressly in the corporate documents the non-tax purposes of the transaction (less conflictual management of the operating company, separation of ownership from management, asset protection and generational succession) and to back the retention of profits with a documented investment strategy. The network assists shareholders and family groups in assessing the risk profile and in assembling the supporting documentation.