With Principle of Law no. 1/2026, the Revenue Agency intervened on the tax treatment applicable to mergers by incorporation between civilly recognized religious entities, with particular reference to the effects for VAT, indirect taxes, and income taxes. This practice document is significant not only for the religious entities sector but more generally for non-commercial entities managing assets composed of goods intended for both the institutional and commercial spheres, confirming the favorable regime for mergers between such entities belonging to the same organizational structure, both from a VAT perspective, with exclusion from the scope of application of the tax, and from an indirect tax perspective, with the application of registration, mortgage, and cadastral taxes at a fixed rate, where the requirements provided by the law are met.
The case examined
The petition originates from an internal reorganization operation involving a civilly recognized religious entity, as the incorporator, and two other religious entities belonging to the same organizational structure. As a result of the merger, the incorporating entity succeeds by universal title to the active and passive legal relationships of the incorporated entities, acquiring their entire movable and immovable assets. In the same context, certain real estate assets already belonging to the incorporating entity transition from the institutional sphere to the commercial sphere of the same entity. It is precisely this second profile that makes the Agency’s clarification particularly interesting, as it requires distinguishing the tax treatment of the merger itself from that of the change in the tax destination of the assets.
Indirect taxes: operation outside the scope of VAT with fixed registration and mortgage-cadastral taxes
For VAT purposes, the Agency confirms that transfers of movable and immovable property carried out as part of a merger by incorporation between civilly recognized religious entities are excluded from the scope of application of the tax, pursuant to Art. 2, paragraph 3, letter f), of Presidential Decree no. 633/1972, as they lack the objective requirement. On this point, the Agency refers to previous practice documents, including response no. 555/2022 and resolution no. 152/E/2008.
Once VAT is excluded, the principle of VAT/registration tax alternativity applies pursuant to Art. 40 of Presidential Decree no. 131/1986. Regarding registration, mortgage, and cadastral taxes, the Agency refers to the relief regime provided by Art. 1, paragraph 737, of Law 147/2013, which was already the subject of clarifications in circular no. 2/E/2014. According to the Revenue Agency, acts of transfer of assets free of charge, carried out as part of merger by incorporation operations between non-commercial entities, can benefit from the application of registration, mortgage, and cadastral taxes in the fixed amount of 200 euros each, provided that three fundamental requirements are met:
- the transfer takes place free of charge;
- the operation qualifies as a structural reorganization intervention;
- the entities involved belong, by law, regulation, or statute, to the same organizational structure, being part of a hierarchical system of coordination, supervision, and control.
In the case examined, these conditions are met, as the religious entities involved belong to the same religious organizational structure, attributable to the same supranational entity. Consequently, indirect taxes are applied at a fixed rate.
Income taxes: neutrality of the merger, but not always
The most significant part of the principle of law concerns the direct tax sector. The Agency confirms that a merger by incorporation between non-commercial entities, specifically between religious entities, does not constitute a realization event and can benefit from the tax neutrality regime provided by Articles 172, paragraph 1, and 174 of the TUIR (Consolidated Law on Income Taxes). However, this neutrality operates only for assets that, in the hands of the incorporated entity, were already held within the scope of business activity and which, as a result of the merger, flow directly into the commercial sphere of the incorporating entity. In this scenario, no tax-relevant capital gains emerge.
The case of assets not related to the business activity of the incorporated entity that, as a result of the merger, flow into the business activity of the incorporating entity is different. In this case, the Agency refers to the analogous application of Art. 171, paragraph 2, of the TUIR, provided for heterogeneous transformation. The effect, in this case, is to assimilate the transfer to a contribution, with the consequent possible emergence of capital gains based on the normal value, pursuant to Art. 9 of the TUIR, where the tax requirements of Articles 67 and 68 of the TUIR are met.
The transition from the institutional sphere to the commercial sphere
Another relevant clarification addressed by the Agency concerns the transition of assets from the institutional sphere to the commercial sphere of the same entity. According to the financial administration, this transition can also assume tax relevance, as it is comparable to a contribution pursuant to Art. 9, paragraph 5, of the TUIR. However, a distinction is necessary between depreciable instrumental real estate assets and non-instrumental real estate assets.
For depreciable instrumental real estate assets, the transition from the institutional to the commercial sphere occurs by applying Art. 65, paragraph 3-bis, of the TUIR and Art. 4 of Presidential Decree no. 689/1974. In this scenario, entry into the business regime occurs at the purchase cost, without the emergence of taxable capital gains. For non-instrumental real estate assets, however, the transition to the commercial sphere constitutes a realization event, with valuation at normal value, and a capital gain may emerge equal to the difference between this value and the purchase price, increased by related charges. It remains understood that, if the non-instrumental real estate assets have been held for more than five years, the transfer does not generate taxable capital gains, in application of Articles 67 and 68 of the TUIR.