Tax due diligence and M&A structuring in Italy

Who we work for

Investors in SMEs who need a fast and defensible tax reading.

01

Family offices, small funds and club deals

Deals on Italian SMEs where a big-network tax due diligence is out of proportion, but the tax risk still needs to be read, quantified and written into the contract.

02

Search funds and independent sponsors

Acquisitions with a vehicle and debt, investors to keep informed and tight deadlines: you need a readable red flag report, a tax-sustainable structure and a counterpart who can keep to the deal timetable.

03

M&A advisers and corporate finance boutiques

Tax coverage of the deal, on the buy side or the sell side, with your name alongside ours or on a white-label basis. The client relationship remains yours.

Our services

From the first look at the data room to post-closing.

01Buy-side tax due diligence. Direct taxes, VAT, withholding taxes and withholding agent obligations, intragroup transfer pricing, past extraordinary transactions, tax credits and incentives used, tax audits, disputes and settlements in progress, for the years still open to assessment. Every finding with its legal basis and quantification.
02Vendor tax due diligence. For sellers: identify and, where possible, fix weak points before opening the data room, and present buyers with an orderly analysis that reduces delays and surprises in the negotiation.
03Tax structuring of the acquisition. NewCo or acquisition holding company, shares or business, debt and interest expense, seller reinvestment, exit perspective: details below.
04Tax support on the SPA. Tax representations and warranties, specific indemnities for identified risks, escrow and holdbacks, price mechanisms and earn-outs, coordination with the W&I broker and insurer on the tax findings.
05Post-closing. Tax handling of any indemnity claims, integration of the vehicle with the target, reporting obligations arising from the transaction and the first tax choices of the new structure.

Tax structuring of the acquisition

How you buy matters as much as what you buy.

The structure is decided before the binding term sheet, based on what emerges from the due diligence and on the goals of investors, lenders and seller.

NewCo or acquisition holding company

The acquiring vehicle, how it is capitalised and financed, whether and when to integrate it with the target, and how it links to the investors' holding company: choices that determine where interest arises, where dividends land and how the exit will be taxed.

Vehicle · debt · integration

Shares or business

With the shares you buy the company with its entire tax history; with the business you acquire assets and contracts, but the transferee is jointly liable, up to the value of the business, for taxes and penalties for the year of transfer and the two preceding years on record with the tax offices. The comparison is based on the risks identified and the overall tax burden for both parties.

Art. 14 D.Lgs. 472/1997 · shares or business

Acquisition debt and interest expense

Interest expense in excess of interest income is deductible up to 30% of gross operating profit (risultato operativo lordo) from core operations, for the period and carried forward from previous periods. In a merger between vehicle and target, the limits on carrying forward losses also apply to interest expense carried forward: they must be simulated beforehand, not discovered afterwards.

Art. 96 and art. 172, para. 7 and 7-ter, TUIR · leveraged buyout

Participation exemption and exit

Capital gains on shareholdings realised by a corporation are 95% exempt if the statutory requirements are met: uninterrupted holding from the first day of the twelfth month before the sale, classification as financial fixed assets in the first financial statements of the holding period, a subsidiary not located in a preferential tax regime country (subject to the available rebuttal evidence) and carrying on a commercial business. The structure must be designed with the exit in mind as well.

Art. 87 TUIR · PEX in holding companies

Contributions

The contribution of a business between resident persons carrying on commercial activities does not in itself generate capital gains; share exchanges and contributions of shares that confer or increase control follow their own rules. Useful tools for reorganising the target or the seller before closing.

Arts. 176 and 177 TUIR · contribution of shares

Seller reinvestment

When the seller stays in the vehicle's share capital, the way they reinvest — sale followed by subscription, or contribution of the shares to the NewCo — changes the timing and amount of taxation. It must be compared with the figures in hand and written consistently into the transaction documents.

Art. 177, para. 2 and 2-bis, TUIR

New TUIR from 1 January 2027. The new Italian income tax code approved by D.Lgs. 19 giugno 2026, n. 117 applies from 1 January 2027 and renumbers most articles: the participation exemption (currently art. 87) becomes art. 96, the interest expense rules (currently art. 96) become art. 105, while arts. 172, 176 and 177 keep the same number. In documents for transactions straddling the year end it is advisable to cite both references: correspondence table.

Method and phases

Four phases, on the deal timetable.

i.

NDA and scope

Confidential call, conflict check, signing of the NDA. We agree scope, materiality threshold, companies and periods to analyse, report format and timing.

Engagement letter

ii.

Request list and data room

Tax request list tailored to the scope, data room access, written questions to the target's management or adviser, and a deep-dive session if needed.

Tracked Q&A

iii.

Red flag report

Quantified findings and proposed remedies, discussed in a call with investors and advisers. On request, a full report and a comparison of structures.

About 10 working days*

iv.

Contract, closing, post-closing

Support on tax warranties and indemnities, price and earn-out, W&I; tax compliance for the transaction and assistance after closing.

Through to integration

* Indicative timing, from a complete data room. It depends on scope, number of companies, quality of documents and response times; the actual timing is set in the engagement letter.

Scope

What we do, and what we coordinate.

Within our scope

Buy-side and vendor tax due diligence, red flag or full.
Quantification of tax risks and proposed contractual remedies.
Tax structuring of the acquisition, the financing and the reinvestment.
Tax clauses of the SPA: warranties, indemnities, escrow, earn-out, interaction with the W&I.
Tax compliance for the transaction and post-closing tax assistance.

With licensed professionals we coordinate

Legal due diligence and contract drafting.
Employment and social security due diligence.
Notarial deeds, expert valuations and certifications.
Statutory audit.
Or we work with the advisers already chosen by investors and M&A advisers, to the same timetable.

Confidentiality

First the NDA, then the documents.

For the first call, anonymous information on the target is enough: sector, size, deal structure, timetable. The name and documents come after the conflict check and the signing of the confidentiality agreement, on our template or on the investor's or adviser's.

A small, named team works on the transaction. Documents stay in the data room provided by the seller or the adviser; anything we receive outside the data room is kept and returned or destroyed as provided by the NDA, in compliance with data protection law.

For M&A advisers

Tax coverage for your deal, white label too.

If you are running a sell-side or buy-side mandate, we can take care of the tax side: vendor due diligence before the process, red flags on targets for your buyers, structuring and tax clauses at contract stage.

We can work with our name alongside yours or on a white-label basis, with the report delivered to your standards and the client relationship remaining yours. Scope, responsibilities and confidentiality are set out in writing before we start; no referral fees are paid.

How professional partnerships work →

The firm

Tentori TLS,
Erba (Como).

Tentori TLS – Tax & Legal Solutions is a tax and corporate advisory boutique: Corporate Tax, Holding & Strategic Advisory. We assist entrepreneurs, groups and investors with acquisitions and sales of shares and businesses, holding companies, contributions, mergers and demergers.

The Managing Partner is Manuel Tentori. We work from Erba with clients throughout Italy, by video call and through data rooms.

Frequently asked questions

Tax due diligence: the questions we hear most.

Q·01What is a tax due diligence?

It is the analysis of the target company's tax position before the acquisition: tax returns, VAT, withholding taxes, past extraordinary transactions, tax credits, tax audits and disputes, for the tax years still open to assessment. The result is a list of tax risks, each quantified and paired with the remedy to bring to the negotiation: price adjustment, specific indemnity, escrow or condition to closing.

Q·02How long does it take to get the red flag report?

As a guide, the tax red flag report arrives in about 10 working days from when the data room is complete. It is an estimate, not a standard commitment: it depends on the agreed scope, the number of companies, the quality of the documents and how quickly questions are answered. The actual timing is set in writing in the engagement letter.

Q·03Which tax years are reviewed?

As a rule, those still open to assessment. Under the rules in force in 2026, an income tax or VAT assessment must be served by 31 December of the fifth year following the year in which the return was filed, or the seventh year if no return was filed (art. 43 D.P.R. 600/1973 and art. 57 D.P.R. 633/1972). The scope widens when there are multi-year items or past transactions whose effects continue today.

Q·04Is it better to buy the shares or the business?

It depends on the risks identified, the seller's position and how the tax values are to be used. With the shares you buy the company with its entire tax history; with the business you acquire assets and contracts, but the transferee is jointly liable, up to the value of the business, for taxes and penalties relating to the year of transfer and the two preceding years, within the limits of what the tax offices have on record at the date of transfer; a clean certificate of pending claims issued by the tax offices releases the buyer, except in the case of a fraudulent transfer (art. 14 D.Lgs. 472/1997, text in force in 2026). The choice should be made with the numbers in hand, together with the seller.

Q·05What is the difference between buy-side due diligence and vendor due diligence?

Buy-side due diligence is commissioned by the buyer, to decide and to negotiate. Vendor due diligence is commissioned by the seller before opening the data room: it serves to identify and fix weak points in advance, to present potential buyers with an orderly analysis and to reduce delays and surprises in the negotiation. The buyer normally uses it as a starting point and still carries out its own checks.

Q·06Is a tax due diligence still needed with a W&I policy?

Yes. A warranty & indemnity policy transfers to the insurer the risk linked to the representations and warranties in the contract, but risks already identified in due diligence are as a rule dealt with in the contract, through price, specific indemnities or escrow. A documented tax analysis is also the basis for discussing the scope of cover with the broker and the insurer.

Q·07Do you also handle the legal and employment side?

Our part is the tax side and the structuring of the transaction. Legal and employment due diligence, the contract and the notarial deeds are handled by licensed professionals, whom we coordinate when the client asks, or by the advisers already chosen by the investor or the M&A adviser, with whom we work to the same timetable.

Q·08Do you also work with M&A advisers on a white-label basis?

Yes. For M&A advisers and corporate finance boutiques we can handle the tax side of the transaction, either with our name alongside yours or on a white-label basis, with the client relationship remaining yours. Scope, responsibilities and confidentiality are set out in writing before we start.

Insights and resources (in Italian)

Worth reading before the data room.

The first step

A confidential call
on the transaction.

You describe the target, structure and timetable, anonymously if you prefer. We come out with scope, timing and an engagement proposal, or with the view that the case does not require a dedicated tax due diligence.

Book a call

Prefer to write?: info@tentoritls.it
Or call: +39 031 547 8406 · Mon–Fri 9·00 → 18·00

Tax due diligence and deal structure,before signing.