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Static holding company and abuse of right: beware of indefinite deferral of profits

published on 10 July 2025 | reading time approx. 3 minutes

The interpretation endorsed by the MEF Guidance Act of February 27, 2025, establishes an undue tax advantage where the distribution of profits to the natural person partner of a holding company is deferred sine die.

The setup of a static holding company, i.e., a corporation that merely holds equity interests without performing operational or coordinating functions, is a fully legitimate choice in strategic tax planning. In particular, the “mediated” holding of a participation through a holding company can generate tax advantages fully recognized by the law.

Notable among these are:

the taxation of dividends received at the reduced rate of 1.2 percent, equal to IRES at 24 percent applied on 5 percent of the taxable dividend (Art. 89 TUIR), instead of the 26 percent provided in the case of direct receipt by the individual;
the same reduced rate of 1.2 percent also for qualified capital gains realized under the participation exemption regime (Art. 87 TUIR), as an alternative to the 26 percent substitute tax ordinarily payable by the individual.

The legal standing of the aforementioned tax benefits is justified by their temporary nature, since the final taxation is only deferred and still falls on the equity holder when the profits are distributed.

Nevertheless, if the distribution of profits is procrastinated indefinitely, the benefit from temporary may become de facto definitive, thus distorting the premise on which the benefit is based. In such cases, the transaction may be framed as abuse of right, according to the provisions of Article 10-bis of Law 212/2000.

Supporting this interpretation is the MEF Guidance Act of Feb. 27, 2025, which includes among the potentially abusive cases “tax deferrals” that are not merely temporary, i.e., those behaviours aimed at postponing taxation sine die in the absence of valid extra-tax reasons.

The failure to distribute profits to the shareholder is not abusive per se, as long as it finds justification in tangible and non-marginal economic reasons. This is the case, for example, with reinvestment in new stakes, the purchase of companies to start a business, or the active management of movable/real estate assets.

Alternatively, if the profits are simply retained and reinvested in financial products, policies or instruments that could also be subscribed to by an individual, the absence of a valid extra-tax purpose may expose the transaction to re-qualification for avoidance.

The above-described risk increases when the holding company uses the undistributed profits for exclusively personal purposes of the shareholder: for example, to grant him loans, purchase property for his enjoyment or incur expenses of a personal nature. In such cases, there may be fictitious interposition under Article 37(3) of Presidential Decree 600/1973, with consequences not only for tax but also for criminal law.

The adoption of a static holding company can be an effective and entirely legitimate tax planning choice, as long as it does not turn into a means of indefinitely evading the tax obligation. Tax deferral is allowed, but it must be temporarily bound and supported by substantial economic reasons. In the absence of such prerequisites, the risk of incurring charges for abuse of right - with the associated penalty consequences - is far from remote.