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Share sale or business transfer: legal and tax differences

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Compare the transaction scope and the consequences for seller and buyer

A share sale changes the owner of a participation in a company. A business transfer transfers an organised business or business unit. That difference affects scope, investigations and the conditions to negotiate. Liabilities, contracts, people and tax need to be considered together. The tax outline below concerns Italy.

The main differences

AspectShare saleBusiness transfer
SellerThe holder of the participationThe business owner, which may be a company or a sole trader
Subject matterAll or part of a shareholdingAn organised business or business unit with a defined scope
Relationships and risksThe company retains its relationships and obligations; change-of-control clauses may matterSpecific rules apply to contracts, employees and liabilities
Buyer’s tax positionThe cost concerns the participation and does not automatically uplift the tax bases of the company’s assetsAllocation of the consideration and the rules for individual assets matter

A sale of shares

The buyer acquires the participation while the company continues to exist. Due diligence and contractual guarantees address the risks within it. Continuity of contracts, authorisations and certifications still needs to be checked, including any change-of-control provisions.

For an Italian tax-resident individual selling outside a business activity, the ordinary capital-gains rate is 26%, subject to particular cases. For corporate income tax (IRES) taxpayers, the 95% participation exemption requires the conditions in Article 87 TUIR; it is not available for every sale by a company.

Rebasing the tax cost of a participation is a separate option. The ordinary substitute-tax rate provided for 2026 is 21%, but eligibility, the tax base, procedures, deadlines and any valuation-report requirement need to be considered. Compare the cost of the option with its expected benefit.

A transfer of a business or business unit

The seller may be a company or a sole trader. Define the operating scope and assess the applicable rules on contracts, assets, employees and formalities. The transaction does not automatically remove historic liabilities. Commercial business debts, employee claims and tax liabilities are governed by different rules. Agreements between buyer and seller do not always bind third parties.

For tax exposure, consider the specific certificate under Article 14 of Legislative Decree 472/1997, with its statutory effects and limitations, including the rules on fraudulent transfers. It is different from a generic certificate of pending tax charges.

The capital gain forms part of the seller’s income, with treatment depending on whether the seller is a sole trader, a partnership or an IRES taxpayer. For a business or unit held for at least three years, Article 86 TUIR permits an election in the tax return to spread the gain in equal amounts over the realisation year and subsequent years, up to five tax periods in total.

For a sole trader transferring a business held for more than five years, separate taxation may be available under the conditions in Article 17 TUIR and the required tax-return election. Where a company sells, any later distribution of proceeds to shareholders is a separate tax question.

A transaction qualifying as a business transfer is outside the scope of VAT and is subject to registration tax. Its application depends on the elements transferred and the allocation of consideration; property may also trigger related taxes. The buyer does not automatically deduct the whole price. Under the ordinary rules of Article 103 TUIR, tax-recognised goodwill is deductible at no more than one eighteenth per year; accounting treatment and special regimes require separate consideration.

Five questions before choosing

  1. What must actually pass to the buyer: a participation, a whole business or a unit?
  2. Which contracts, authorisations and assets are essential?
  3. What liabilities and disputes have the investigations identified?
  4. How do the buyer’s funding needs and seller’s net proceeds differ?
  5. Which conditions, guarantees and timetable should negotiations address?

Employment protections and any applicable information and consultation procedures also matter. Choose the structure by comparing the actual transaction, rather than tax rates alone.

Read how to acquire a business. For a concrete sale, describe your sector, objectives and negotiation stage: our M&A advisory can help organise the comparison and the work needed.

English editorial version based on the Italian texts by Andrea Ricciardi, Italian chartered accountant (Studio Ricciardi).

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