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Bilancio e reddito d'impresa

The principle of substance over form

Giulio Tedeschi Giulio Tedeschi

Bilancio e reddito d'impresa n. 1/2019

A new formulation of the principle of "substance over form" leads to some considerations on its accounting and tax relevance with reference to the process of deriving the business taxable income from the result of the year shown in the Financial Statements, also in the light of OIC accounting standard no. 11 dated March 2018. This, considering that accounting standards issued by OIC have gained an increasing legal value and, subsequently, also an increased tax value.

Recognition and posting of items according to substance

Legislative Decree no. 139/2015, which implements Directive 2013/34/UE, considerably changed the provisions of the Italian Civil Code on the preparation of the Financial Statements for joint-stock companies that do not apply IAS/IFRS. To include these changes, the Italian Accounting Standard Setter (OIC) updated in turn its accounting standards.

Subsequently to the changes introduced by the above Decree, art. 2423-bis, para 1, of the Italian Civil Code introduces, as a separate and general provision, point 1-bis, according to which FS items must be recognized and posted basing on the substance of the operation or the contract. Therefore, while in previous formulation the principle of substance over form regarded the "evaluation" of items, now it is referred to their "recognition and entering" in the FS.