MLBO: right to VAT deduction recognized for special purpose vehicles

With the recent Resolution No. 7/2026, the Revenue Agency intervenes definitively on the tax treatment within merger leveraged buy out operations. Through this practice document focused on MLBO: right to VAT deduction recognized for special purpose vehicles (SPVs), the Administration provides clarifications of fundamental importance for deal planning.

The financial administration officially admits that purchases of goods and services carried out by the SPV, provided they are functional to the realization of the acquisition operation, benefit from the full right to tax deduction. This is because the special purpose vehicle plays a role strictly connected and preparatory to the economic activity that will be exercised following the merger with the target company, according to the corporate scheme outlined by Art. 2501-bis of the Civil Code.

The role of the SPV in leveraged buy out operations

In the typical leveraged buy out scheme, the SPV (Special Purpose Vehicle) is established with the exclusive objective of acquiring the stake in the target company and, subsequently, merging with it. This corporate sequence highlights how the acquisition of shares represents a temporary and instrumental phase compared to the final merger, which constitutes the true industrial core of the operation.

In this specific context, the costs for consulting, due diligence, and debt structuring incurred by the SPV are directly linked to the economic activity that will be carried out by the company resulting from the merger. This results in the existence of a functional link between the initial expenses and future taxable operations, a key element for the application of EU rules regarding value added tax.

Jurisprudential references of Resolution 7/2026

The Agency's new position is based on consolidated jurisprudential trends, both at the EU and national levels, which have redefined the boundaries of tax subjectivity:

• The EU Court of Justice has stated on several occasions that even preparatory and investment acts must be considered an integral part of the global economic activity;

• The Court of Cassation has clarified that, in corporate reorganization operations, the entire process must be evaluated in a unified manner and aimed at the merger between the SPV and the target.

In light of these principles, anyone who incurs expenses with the certified intent of starting an economic activity must be considered a taxable person for tax purposes from the preliminary stages of starting the project.

Special purpose vehicles vs. “static” holdings

A central passage of the resolution concerns the clear distinction between special purpose vehicles and mere asset-holding companies.

SPVs created for a buy out project cannot be equated to “static” holdings, i.e., those entities that limit themselves to the passive possession of shareholdings without interfering directly or indirectly in the management of the subsidiaries. In these latter cases, in fact, the essential requirement of tax subjectivity is missing.

On the contrary, special purpose vehicles operate with a very specific purpose: to find financial resources on the market, acquire the target, carry out the merger, and allow the direct continuation of the business activity. This exquisitely operational and instrumental role justifies the application of the principle expressed in the guideline on MLBO: right to VAT deduction recognized on the costs incurred.

Principle of neutrality and overcoming old orientations

The resolution reiterates a cornerstone of the European tax system: tax neutrality. Based on this principle, the right to deduct costs cannot be denied solely because the taxable operations (sales and invoicing) will be carried out concretely at a later time, i.e., only after the merger has taken place.

With this intervention, the Revenue Agency confirms the favorable approach already emerged in Circular No. 6/2016 and Legal Advice No. 17/2019, while distancing itself from some excessively restrictive ruling responses published in subsequent years. Resolution No. 7/2026 therefore marks a decisive alignment of the financial administration with the principles of European Union law, overcoming the strong application uncertainties that risked slowing down institutional investments in Italy.

Plan your company's financial and tax security

The team of professionals at Studio Alcor is available to support your company in proper corporate management, tax compliance, and strategic planning.

Request an appointment with our consultants at the nearest office