Giunio Tonucci of Tonucci & Partners contributed to Global Legal Chronicle Italia with an in-depth article regarding the transfer of shareholdings at a nominal price, a common transaction in corporate practice but distinguished by tax implications that require particular attention.

From a civil perspective, contractual autonomy permits parties to freely determine the compensation, while considering the tax point of view, a price significantly lower than the economic value of the shareholding may have evidential weight and might require a careful assessment of the reasons that brought forth the transaction. As Giunio Tonucci points out, the key issue is therefore not whether a shareholding can be sold for one euro, possibility permitted as a matter of principle, but rather understanding the economic purpose of that compensation in the specific contractual context. The nominal price should not be considered illegal on its own but needs to be explained coherently within the economic reasons of the transaction.

This issue is set to become increasingly relevant in corporate transactions and future tax disputes where the economic part of the transaction and the ability to adequately document its rationale can become crucial.