Studio PonchioSTP
Sale of a business in fraud of the tax authorities: unlimited liability for the buyer
Where the transfer is designed to strip the Treasury of its security, every limitation in Article 14 of Legislative Decree 472/1997 falls away: the pending-liabilities certificate no longer protects the buyer.
Anyone buying a business or a business division inherits a tax liability that, in ordinary circumstances, is confined within precise boundaries; where there is fraud, those boundaries disappear.
The ordinary rule
Article 14 of Legislative Decree no. 472 of 18 December 1997 makes the buyer jointly and severally liable with the seller for taxes and penalties relating to breaches committed in the year of the sale and in the two preceding years, as well as for those already imposed and challenged in the same period. That liability nonetheless operates with the beneficio della preventiva escussione (the right to have the seller pursued first) and is capped at the value of the business or division transferred.
The pending-liabilities certificate
On request, the tax administration issues a certificate on outstanding challenges and debts. A clean certificate, or one not issued within forty days of the request, fully discharges the buyer: it is the most effective due diligence tool available before closing the deal.
When the protection falls away
The limitations do not apply where the sale was carried out in fraud of tax claims. Fraud is presumed, subject to evidence to the contrary, where the transfer takes place within six months of a finding of a criminally relevant breach. In that case the buyer is liable without the benefit of prior enforcement against the seller, beyond the value of the business and without the ordinary time limits: checking the seller’s position in advance becomes decisive.
- Legislative Decree no. 472 of 18 December 1997 – art. 14, paragraphs 1 to 5.
- Pending-liabilities certificate – art. 14, paragraphs 2 and 3, Legislative Decree 472/1997.