Agricultural Societies

The benefits that were previously reserved exclusively for individual agricultural entrepreneurs were also extended to those who operate in an associated form with the 2004 reform: the status of professional agricultural entrepreneur (IAP) was also granted to agricultural companies, whose characteristics are completely redefined by the reform.

Agricultural corporations can be established in the form of partnerships (s. s., s.n.c. or s.a.s.), corporations (s.r.l. or S.p.A.) and cooperatives, but three requirements must always be present, two pertaining to the contents of the articles of incorporation or bylaws, and the third, pertaining to the persons of the partners or directors.

The first requirement concerns the company’s object: the company must have as its sole purpose the practice of agriculture and related activities, as identified in Article 2135 of the Civil Code. According to the new wording of this rule, they fall under agricultural activities:

– the cultivation of the fund;

– forestry;

– animal husbandry;

– All related activities, namely:

– The activities directed to the handling, preservation, processing, marketing and enhancement of products obtained mainly from the cultivation of the land or forest or from the raising of animals;

– The provision of goods or services using mainly the farm’s equipment or resources;

– the farmhouse.

The second requirement relates to the company name or name, which must always contain the words “agricultural company.”

The third requirement, refers to the fact that:

• in partnerships (s.s.; s.n.c.) at least one of the partners must hold the status of professional farmer or direct farmer, while the other partners may also not be farmers, regardless of their number;
• In limited partnerships (s.a.s.) at least one general partner must be a professional agricultural entrepreneur.
• In corporations, at least one director must be a professional agricultural entrepreneur or farmer. Therefore, since in corporations the directors may also not be partners, the case may arise of an agricultural corporation in which none of the partners is a farmer, and perhaps only one of the board members has IAP status. And again, a single-member company could be conceived in which the sole shareholder is not a farmer, and only one of the directors holds the statutory title.
• In cooperative societies, on the other hand, it is necessary for at least one director, who is also a member, to have the status of IAP or direct farmer.

It should be kept in mind, however, that the status of professional farmer or direct grower can only be contributed by the director to one company.

In addition, it should be pointed out that the director of an agricultural corporation and the partner of an agricultural partnership may acquire the status of professional agricultural entrepreneur by virtue of the activity carried out within the agricultural corporation, provided, however, that they possess professional agricultural skills, devote at least half of their working time to the activity carried out within the agricultural corporation, and derive at least half of their income from it (excluding pensions). Then, as for the amounts received for the work done in agricultural companies, these wages allow for registration in the Agricultural Social Security Administration.

In light of the above, agricultural companies meeting the above requirements are eligible for all indirect tax and credit tax benefits reserved for direct farmers, that is, individuals who devote their manual labor to cultivating the land. So when purchasing farmland, agricultural companies can apply for the facilities for the formation and rounding up of small farm property (P.P.C.).

Agricultural companies also will be able to take advantage of the relief that provides exemption from any tax on the purchase of land for those who form a single compendium and undertake to cultivate or conduct it for at least 10 years after transfer.

Agricultural companies can also apply for tax benefits for the purchase of agricultural land before they have obtained the status of professional agricultural entrepreneur, as long as they have already submitted the application to the relevant office, which issues certification, and the partner or director is already registered with the social security administration, in fact, the status must be obtained within twenty-four months, under penalty of forfeiting the benefits.

Previously, agricultural companies were penalized by the law because they could not enjoy most of the benefits for the purchase of farmland and because the requirements for becoming a farmer were much more restrictive. In fact, previously, in partnerships at least half of the partners had to be principal agricultural entrepreneurs (half of the general partners in the case of limited partnerships), while in corporations at least 50 percent of the share capital had to be subscribed by principal agricultural entrepreneurs.

In order to take advantage of the benefits, pre-existing agricultural companies must adapt to the new requirements, and to this end, a benefit has been provided that consists of exemption from any tax due for the amending deeds.

Attorney Chiara Roncarolo

Attorney Maurizio Randazzo