Functional autonomy in the transfer of a business unit: Italian Supreme Court decision no. 17201/2025

However, for such a transaction to be legally recognized as a transfer of a business unit, the assets involved must exhibit pre-existing functional and organizational autonomy, enabling them to operate as an independent economic entity. Pursuant to Article 2112, paragraph 5, of the Italian Civil Code, a business unit is defined as “a functionally autonomous division of an organized economic activity, identified as such by the transferor and the transferee at the time of its transfer”.

This principle of functional and organizational autonomy, long established in case law, was recently reaffirmed and further analysed by the Italian Supreme Court in its decision no. 17201 of 26 June 2025 (hereinafter, the “Decision”), which offers significant insights and is the subject of this analysis.

The case examined by the Supreme Court concerns the transfer, by Intesa Sanpaolo Group Services S.c.p.A. (later merged into Intesa Sanpaolo S.p.A.), of its Credit Recovery Department to Tersia S.p.A., which later became Intrum Italy S.p.A..

The transaction, formally qualified as a transfer of a business unit, was challenged by employees of the transferee, who claimed it to be null and void due to:

The Supreme Court’s analysis focused on two key aspects:

With regard to the requirement of functional autonomy, the Court affirmed that “the transferred unit must be capable of conducting business activities independently of any service agreement simultaneously entered into between the transferor and the transferee”. Accordingly, autonomy cannot be artificially created at the time of the transfer; it must pre-exist and be inherent in the unit’s organizational structure. This element of functional autonomy must be interpreted in together with the requirement of pre-existence, as established by the Court of Justice of the European Union in its judgment of 6 March 2014, Case C-458/12, which ruled that “the autonomy of the transferred entity must, in any case, pre-exist the transfer”. In conclusion, the transferred unit must be able to operate independently of any service agreement entered into between the parties at the time of the transaction.

Before examining the position taken by the Supreme Court, it is worth noting that legal doctrine remains divided on what may effectively constitute a business. One school of thought suggests that contracts, receivables, and payables related to the business do not fall within the definition of the business itself, whereas contractual relationships through which the entrepreneur secures access to core business assets (the so-called “business contracts”) do. An alternative interpretation holds that a business contribution may consist predominantly of legal relationships—such as employment contracts, agreements with suppliers, customers, or collaborators (the so-called “enterprise contracts”).

Although the Court does not directly address this doctrinal debate, it appears to align more closely with the second view, acknowledging in abstract terms the possibility of a dematerialized business unit composed primarily of legal relationships. However, the Court conditions the legitimacy of such a configuration on the existence of effective functional autonomy at the time of the transfer. In doing so, the Court synthesizes the two doctrinal positions, striking a legal balance between the structural concreteness of the business unit and the abstract nature of the relevant legal relationships.

In its decision, the Supreme Court held that the business unit subject to transfer, although partially composed of dematerialized legal relationships, “lacked the element of organizational and economic autonomy necessary to carry out activities aimed at the production of goods and services”. In particular, the Court emphasized that the service agreements entered into at the time of the transfer—specifically those relating to software programs supporting the transferred activities—clearly demonstrated the functional dependence of the unit on the transferor, thereby excluding its qualification as an autonomous entity.

The Supreme Court’s decision no. 17201/2025, in which it states that “a disaggregated set of fragments of the production process lacking the autonomy necessary for the production of goods and services cannot constitute a business unit”, aligns with a jurisprudential trend that prioritizes the economic and organizational substance of the transaction over its formal structure. This ruling calls for a critical assessment of the assets comprising the business unit subject to transfer, in order to avoid mere outsourcing of personnel or functions lacking genuine autonomy and supported solely by ancillary agreements. The transfer of a business unit must be grounded in objective and verifiable legal requirements. The absence of such requirements may render the transaction ineffective vis-à-vis third parties and null and void between the parties.