Investimens and Real Estate

Cross-border company mergers

Cross-border company mergers represent a crucial strategic tool for businesses aiming to expand their size and competitiveness within the European and international single market. These extraordinary transactions allow the unification of two or more companies incorporated in different Member States—or even with non-EU entities (international mergers)—into a single legal entity, while ensuring the continuity of existing relationships and obligations.

The framework, recently updated by Legislative Decree No. 19/2023 implementing Directive (EU) 2019/2121, has introduced a specific regulatory discipline designed to facilitate cross-border mergers. The operation involves multiple stages, including the preparation of a detailed merger plan and the issuance of a preliminary legality certificate, in Italy granted by a notary public, which is essential for the transaction’s effectiveness. It is crucial to balance the facilitation of such operations with the protection of shareholders, creditors, and employees, for whom specific safeguards have been established by law.

The international law firm Boschetti provides expert assistance at every stage of these complex transactions, ensuring compliance with both national and EU legislation. Approaching a cross-border merger with competence is essential to secure the benefits of tax neutrality and to fully leverage the economic advantages that follow.

Cross-border mergers: the applicable law

As clarified by Assonime in Circular No. 19/2025, the recent amendments to Legislative Decree No. 19/2023 introduced by Legislative Decree No. 88/2025 have strengthened the effectiveness of the framework governing cross-border mergers, demergers, and transformations. The new decree has resolved several interpretative uncertainties that had arisen during the early implementation of the previous law, thereby simplifying corporate reorganizations and promoting business mobility not only within the EU but also internationally.

A key principle established by the corrective decree concerns the primacy of the law of the destination state. In case of conflict between Italian law and foreign law, for the phases following the issuance of the preliminary legality certificate, the law of the country where the resulting (or beneficiary) company has its registered office applies. This principle also extends to cross-border transformations.

Conversely, for procedures and formalities preceding the issuance of the preliminary certificate, the legislation of the home state of each company involved continues to apply. The role of the Italian notary remains unchanged as guarantor of the regularity of all acts where the resulting company is established in Italy, ensuring the legitimacy of the entire process through the drafting of the final public deed.

Types of cross-border mergers

A cross-border merger is defined as the combination of two or more companies incorporated under different national legal systems, at least two of which are governed by the laws of different states. As in purely domestic mergers, such operations may take two principal forms.

The first is the merger by formation of a new company, in which two or more companies dissolve without liquidation and transfer all their assets and liabilities to a newly established entity. In this case, the shareholders of the dissolved companies receive shares or quotas of the new company.

The second, and more common, form is the merger by incorporation, whereby one or more companies (“acquired” or “merged” companies) are absorbed by an existing company (“acquiring” or “incorporating” company), which acquires all their assets and liabilities. The shareholders of the merged companies receive shares or quotas in the acquiring company.

In cross-border mergers, as in domestic ones, the transaction may occur between companies of the same type (homogeneous) or of different types (heterogeneous), in which case the rules on corporate transformations apply. Furthermore, Legislative Decree No. 19/2023, as amended by Legislative Decree No. 88/2025, extends the scope of application—where compatible—to mergers involving partnerships and non-corporate entities. In all cases, a cash adjustment may be paid, which, for capital companies within the EU, must not exceed 10% of the nominal or accounting value of the shares issued.

Scope of application

The scope of cross-border mergers has been defined and harmonized at the European level, primarily through Directive 2005/56/EC, subsequently implemented in Italy by Legislative Decree No. 19/2023 and its amendments.

The framework primarily applies to mergers involving capital companies incorporated in accordance with the laws of an EU Member State, provided that at least two of them are governed by the laws of different Member States. In principle, this framework also extends to transactions involving Italy and companies or entities based in non-EU countries, referred to as international mergers, provided that the transaction complies with the laws of all jurisdictions involved.

The amendments introduced by Legislative Decree No. 88/2025 have extended the framework, where compatible, to include partnerships and non-corporate entities participating in cross-border extraordinary operations, though simplified procedures apply to the latter. Certain entities are expressly excluded, such as capital companies in liquidation (judicial or voluntary) that have already started distributing their assets, and collective investment undertakings (UCITS, SICAVs, and banks under crisis resolution procedures).

Conversely, cross-border mergers are compatible with insolvency and restructuring procedures under the Italian Code of Business Crisis and Insolvency, provided that they form part of a recovery plan consistent with the legality and transparency requirements necessary for the preliminary certificate and other conditions of the Civil Code.

For cross-border mergers not covered by the EU Directive (such as those involving non-corporate entities), application of the European framework depends on its compatibility with the relevant foreign legal system.

Legislative framework

The legal framework governing cross-border and international mergers consists of a complex set of European and national rules designed to overcome the difficulties arising from the coexistence of different legal systems and to ensure conditions similar to those of a single internal market. Historically, mergers between companies from different Member States were governed by the Third Council Directive (78/855/EEC) for joint-stock companies and by Directive 2005/56/EC for cross-border mergers. These provisions have been progressively incorporated and updated.

The current Italian reference is Legislative Decree 19/2023, issued to implement Directive (EU) 2019/2121, which replaced Legislative Decree 108/2008. The decree governs not only cross-border mergers but also cross-border transformations and demergers, thus promoting freedom of establishment.

Equally important are the supplementary provisions introduced by Legislative Decree 88/2025, which expanded the framework’s application to partnerships and non-corporate entities and strengthened legality controls and disclosure requirements.

A key element is the common tax regime established by Directive 90/434/EEC, aimed at ensuring tax neutrality for cross-border and international restructuring operations, thereby avoiding the immediate taxation of unrealized capital gains. The complex interaction between national laws (particularly in the preliminary phases) and EU law makes specialized legal advice indispensable to ensure the full legitimacy of every cross-border and international merger.

Advantages and critical issues of cross-border mergers

Cross-border mergers offer numerous economic and managerial advantages, but they also present significant procedural and legal challenges that require careful strategic planning. Among the advantages, the main one is the expansion of companies’ size and competitiveness in the market, allowing adaptation to the needs of the single market and an improvement in productivity, in line with EU objectives. These extraordinary cross-border transactions allow a legal and economic concentration, streamlining into a single unit the assets and organizational structures of companies operating in different states. Tax benefits, such as tax neutrality at the time of the cross-border merger, further facilitate these concentrations.

The critical issues lie mainly in the complexity of the procedure. Despite harmonization, the transaction requires compliance with both Italian law, or the law of the home state, and the law of the destination state, if different, with possible conflicts between legal systems that may prevent or hinder the transaction. The preparatory phase is long and detailed, requiring a merger plan enriched with specific items, such as an indication of public benefits received and the impact on employment. Another challenge is the need to undergo a double legality check, the preliminary certificate and the final control.

There is, finally, the risk of opposition, both by creditors and by minority shareholders, or of disputes concerning the fairness of the exchange ratio. For this reason, the assistance of the International Law Firm Boschetti is essential to mitigate such risks and to ensure the proper execution of the cross-border merger.

Comparison between domestic and cross-border mergers

The comparison between domestic mergers and cross-border company mergers shows that, although the substantive effects, asset unification and continuation of relationships, are similar, the procedures differ significantly in terms of complexity and disclosure burdens. Domestic mergers are governed mainly by Articles 2501 et seq. of the Civil Code. Cross-border mergers, while respecting the applicable national provisions, unless otherwise provided by EU law, require additional steps under Legislative Decree 19/2023, as well as Legislative Decree 88/2025, in compliance with EU rules.

A crucial difference lies in the documentation required. In a cross-border merger plan, unlike a domestic one, additional mandatory elements must be included, such as the governing law of the companies involved, the likely impact on employment, and information on public or localized benefits received by the company.

The control procedure is clearly different, in domestic transactions the legality check is usually handled by the notary who records the shareholders’ resolution and focuses on that approval. In cross-border mergers, by contrast, the process provides for a double legality check, the preliminary one, in the home country, in Italy carried out by the notary, certifying the regularity of the preliminary acts, and the final one, in the destination country, aimed at verifying approval of the same plan and, where necessary, the arrangements for worker participation.

Finally, the opposition periods for creditors differ, while for domestic mergers involving joint stock companies a period of sixty days is required, thirty when no listed companies are involved, from registration of the last resolution, for extraordinary cross-border transactions between capital companies the period is set at ninety days from publication of the cross-border merger plan.

Typical scenarios / Case studies

The typical scenarios have been developed by drawing on the most significant corporate immigration cases that the firm regularly handles, with the aim of creating structured, complex examples that help the reader navigate their own situation. The case studies, by contrast, illustrate individual real-life matters, anonymised to protect client confidentiality, presented with full factual and contextual detail.

Relocation

US professional chooses Italy: elective residence obtained and future planned

American professional obtains an elective residence visa while maintaining ties with the USA. Integrated assistance from legal strategy to property search..

Application completed in approximately 3 months without additional requests

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Business

US opera singer obtains work authorization in 7 days

American opera singer with contracts already signed with an Italian theatre. Self employment work authorization obtained on an urgent basis to meet professional commitments.

Work authorization issued within 7 days from submission of the application

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Real Estate

US client purchases property in Rome: secure transaction

American client assisted in the purchase of a property in Rome. Urban planning issues and contractual risks identified and resolved before signing, transaction completed through notarial power of attorney.

Purchase completed within one month, entirely managed remotely

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Business

American investor: from New York to a villa in Tuscany

Cross-border property transaction with full relocation service. Purchase of a high-end property, with tax status, residency and NHS registration handled remotely.

Complete relocation service, from property due diligence to handing over the keys

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Retirement

Canadian couple, retirement property in Puglia

From Toronto to the Itria Valley. Purchase of a farmhouse with cadastral issues, 7% flat tax on foreign pensions, elective residence visa and healthcare transition.

7% flat tax activated, cadastral issues resolved before the deed of sale

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Business

British entrepreneur, opening a business in Milan

Post-Brexit, a London-based tech entrepreneur establishes an operational headquarters in Milan. Immigration pathway as a non-EU national, company incorporation, and tax planning.

European operational hub established with self-employment visa successfully obtained

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Tax Planning

Swiss retiree: 7% flat tax regime in Southern Italy

A banking executive relocates from Zurich to Calabria. Management of the Swiss occupational pension pillar, Italy-Switzerland Tax Convention, and deregistration from the cantonal tax register.

7% flat tax activated on all foreign-sourced income

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Retirement

American couple: retirement project in Abruzzo with visa and flat tax

From Connecticut to Abruzzo. Elective residency visa, 7% flat tax coordinated with IRS and FATCA obligations, and transition from Medicare to the Italian NHS (SSN).

7% flat tax activated on Social Security and 401(k) pension income

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Relocation

German couple, from Munich to Tropea

Retired engineers from the Bavarian automotive sector. Multi-tier pension management, Italy-Germany Tax Convention, and the 7% preferential tax regime.

Three German pension pillars optimised with Italian flat tax

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Business

Startup tech: apertura filiale italiana per il mercato EU

A Bay Area SaaS company establishes a Milan headquarters. Innovative startup SRL, EU Blue Card for the team, transfer pricing, impatriates tax regime, and GDPR compliance.

Operational within 5 months, payroll cost −35% with impatriates tax regime

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Business

Fashion brand, representative office in Milan

Brand premium newyorkese apre presidio a Milano. Strutturazione per evitare stabile organizzazione, trasferimento direttrice creativa e gestione showroom.

Rischio stabile organizzazione prevenuto, presidio EU operativo

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Corporate

Manufacturing company, ICT transfers to Italy

Multinazionale giapponese trasferisce 3 figure chiave in Piemonte. Permessi ICT per manager e specialista, coordinamento consolare e regime impatriati per tutti i dipendenti.

3 trasferimenti completati in 4 mesi e mezzo, linea produttiva avviata nei tempi previsti

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How the International Law Firm Boschetti can help with cross-border mergers in Italy

The International Law Firm Boschetti offers integrated and strategic assistance to businesses intending to undertake a cross-border merger in Italy. Our team of accountants and lawyers supports clients from the earliest stages, analysing the legal and tax feasibility of the transaction and drafting the merger plan in compliance with Italian and European regulations.

The Firm assists in preparing the necessary documentation, obtaining the preliminary legality certificate, and coordinating with authorities and notaries in different jurisdictions, ensuring the regularity and effectiveness of the process. It also provides targeted tax advice to secure the transaction’s tax neutrality, preventing the risk of disputes and penalties, and immigration legal assistance to identify the most suitable visa and residence permit for foreign entrepreneurs who wish to relocate to Italy.

An additional value is support in managing safeguards for shareholders, creditors, and employees, ensuring that the rights of all stakeholders are respected in accordance with current rules. Thanks to its international experience, the Firm facilitates communication and cooperation among parties in multiple jurisdictions, reducing the time and cost of the procedure. Its assistance enables companies to approach cross-border mergers with greater legal certainty and operational efficiency.

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Investor visa: how to prove the source of funds?

The source of funds must be demonstrated through banking and financial documentation proving ownership, availability, transferability, and lawful origin of the capital: recent bank statements (typically covering the last 3 months), certifications from the financial institution, and documents evidencing the source of funds (income, sale of assets, donations, or other traceable transactions).

For the Italian investor visa (minimum €500,000 in a company or €250,000 in an innovative startup), documentation must be in Italian or English (or officially translated) and verifiable. Authorities carry out anti-money laundering checks and also require proof of no criminal convictions and of the lawful origin of the funds.

Real estate purchase as a foreigner: does buying a property grant a residence permit?

No, purchasing a property in Italy does not automatically grant a residence permit. A non-EU national may freely buy property, subject to the condition of reciprocity, but residing in Italy requires an independent residence title: elective residence, investor visa, work, or another legal ground предусмотрed by law.

However, owning property can be a useful requirement for several types of residence permits, particularly elective residence. It demonstrates a connection to the territory and satisfies the accommodation requirement, as well as indicating the availability of sufficient financial resources. Therefore, the purchase should be part of an overall immigration strategy.

Foreigner buying property in Italy: what taxes apply and what incentives are available?

A foreign buyer pays the same taxes as an Italian citizen: a registration tax of 9%, or reduced to 2% if the “first home” benefit applies; VAT at 4% or 10% if purchasing from a developer. In addition, there are mortgage and cadastral taxes (€200 each for a first home).

The “first home” benefit is also available to foreigners, provided they establish residence in the municipality where the property is located within 18 months of purchase. Special tax regimes for new residents or inbound workers may offer further advantages on the taxation of foreign

Elective residence based on property purchase: what is the minimum income required?

There is no minimum amount set by law. The consulate assesses on a case-by-case basis whether the applicant has sufficient means to support themselves without working in Italy. In practice, an annual income from passive sources (pension, annuities, dividends) of at least €31,000 for a single applicant is generally considered sufficient, with higher thresholds for dependent family members.

Elective residence is intended for individuals who wish to relocate to Italy without carrying out any work activity. Owning a property or having a long-term rental agreement strengthens the application. Proof of passive income sources is the key requirement.

Opening a representative office in Italy: what are the tax obligations and advantages?

A representative office does not carry out commercial activities in Italy: it promotes the business, gathers information, and manages relationships with clients and suppliers without entering into contracts. As it does not constitute a permanent establishment, it does not generate taxable income in Italy and is not subject to corporate income tax (IRES) or VAT on its activities.

The advantages: a physical presence in the Italian market without direct taxation, low start-up costs, and no obligation to prepare separate financial statements. The obligations: registration with the REA (Economic and Administrative Index) at the Chamber of Commerce, keeping accounting records for expenses incurred, and filing withholding tax returns if employees are hired.

Innovative startup in Italy: what tax incentives are available for foreign founders?

Foreign founders of innovative startups may benefit from a 30% personal income tax (IRPEF) deduction (up to 50% in certain cases) on investments in the company’s capital, the favorable tax regime for new residents, and exemption from Chamber of Commerce fees and stamp duties for the first five years.

The startup must be registered in the special section of the Companies Register and meet the requirements set out in Law Decree 179/2012, which are also verified by the Investor Visa for Italy Committee. As for immigration pathways, the investor visa requires a minimum investment of €250,000 in an innovative startup.