Law No. 232 of 11 December 2016 (Budget Law for 2017), in force since 1st January 2017, amended Art. 182-ter of the Italian Bankruptcy Law by repealing the tax consolidation rule and setting aside the interpretation that the tax settlement thereby provided could be chosen as an alternative to a proposal to tax and social security agencies, based on ordinary rules

The tax settlement before Law No. 232 of 2016

Art. 182-ter IBL provided that tax and social security debts (in the context of a concordato preventivo procedure, or of a debt restructuring agreement) could be partly written off or rescheduled, while VAT debts and unpaid withholding taxes could only be rescheduled.

According to case law a tax settlement proposal according to Art. 182-ter IBL in concordato preventivo:

• was a choice for the debtor, who could as an alternative make a proposal to tax and social security agencies according to ordinary rules, without being bound to meet the requirements of Art. 182-ter IBL, but also without availing itself of the tax consolidation regime which was the distinguishing feature of the tax settlement;

• was not depending on the vote of the majority of the creditors and, therefore, could not be imposed to the tax and social security agencies, if they did not expressly accept it.

Further to the decision of the European Union Court of Justice of 7 April 2016 which ruled that a concordato preventivo proposal providing for a partial write off of VAT debts is not contrary to European law, if the debtor still elected to resort to a tax settlement proposal, it was still bound to provide for full payment of VAT and withholding taxes (see Cass., Joint Chambers, 27 December 2016, No. 26988) and, therefore, this was still a distinctive feature of tax settlement.

Amendments introduced by Art. 1, para. 81, of Law No. 232 of 2016

Changes deeply affected Art. 182-ter IBL, as it appears just by looking at the new title of the Article which now reads “Treatment of tax and social security receivables”.

First, the choice between a proposal according to the tax settlement rules or to ordinary rules was repealed, as it is now provided that the debtor can propose a partial or delayed payment of tax and social security debts only resorting to Art. 182-ter IBL. On the other side, however, tax and social security agencies are now bound by the vote of the majority of creditors, as it was the case before, when the debtor did not resort to the tax settlement.

Second, VAT and unpaid withholding taxes, as well as other taxes and social security debts, can now be offered a partial payment, provided this is not less than the liquidation value of the debtor’s assets on which tax and social security agencies have a priority (this is the same test set forth in Art. 160 second para. IBL, providing for the general rule that secured creditors can be paid only in part under the concordato proposal. It is then expressly provided that, in case the debtor does propose to write off in part a secured tax or social security debt, the portion thus made an unsecured claim shall be treated as a separate class under the concordato proposal.

Third, as regards the procedure, taxes and social security receivables are now treated alike, irrespective of the fact that they have been set for collection: the vote on the proposal is cast by the tax or social security agency, based on a prior approval by the regional office, according to ordinary rules, while the tax collectors vote only for their collection fees.

Finally, the tax consolidation rule was repealed, along with the termination of all pending disputes between the debtor and the tax or social security agencies as a consequence of the approval of the tax settlement proposal.


Tax settlement under the previous rules of Art. 182-ter IBL was not very often resorted to by debtors, due to the uncertainties in the interpretation of the relevant rules and to the fact that the tax and social security agencies were not bound by the vote of the majority of creditors, while the debtor could seek the only advantage of the tax consolidation rule.

Lawmakers therefore repealed most of the previous rules, re-writing Art. 182-ter IBL which is now a special rule governing the concordato proposal as far as it refers to tax and social security debts.

General rules governing the binding effect of the proposal approved by the majority of creditors (and of classes, if provided) apply, while special rules set forth in Art. 182-ter IBL refer to (i) the internal procedure for the decision by the tax and social security agencies on the vote to be then casted in the concordato, and (ii) the minimum treatment which the proposal shall provide for tax and social security debts (this has not undergone significant changes, but for the treatment of VAT and unpaid withholding taxes, as noted earlier).