Simona Zangrandi was born in Milan on 21/12/1971. In 1997 she took her degree in Business Economics with first class honours at the Università di Pavia. She has been enrolled in the professional accountants’ register of Milan since 2001. She has been enrolled in the auditors’ register since 2001. She has worked for the firm since 2006.
In order to face the COVID-19 emergency, the government has issued Decree-Law 18/2020, a package of extraordinary measures to strengthen the national health service and provide financial and economic support to families, workers and companies. The decree-law entered into force on 17 March 2020 and will be converted into law, with potential amendments, by Parliament within 60 days of its adoption. This article summarises the main tax measures included in the decree-law.
In December 2019 Parliament passed the Budget Law for 2020 and a related tax law decree. Most of the new provisions apply from 1 January 2020 or will become applicable in 2020. For example, as of 2020, the tax on financial instruments held abroad and on foreign real estate also apply to non-commercial entities (including trusts and foundations) and certain Italian tax-resident partnerships. This article summarises the main changes applicable to corporate entities.
The recently passed Growth Decree has introduced a number of tax provisions which apply to various sectors. In particular, the decree-law has extended the super depreciation regime to investments in new tangible assets in certain circumstances, introduced a corporate income tax reduction on reinvested earnings and restored tax incentives for business combinations, allowing companies involved in mergers, demergers or business combinations to get a free tax step-up in the book value of relevant assets up to €5 million.
Italy's value added tax (VAT) group scheme recently took effect. The scope of application, conditions and implications of the VAT group scheme are different from the existing VAT consolidation scheme. Contrary to the VAT consolidation scheme, where each entity remains not only independent from a juridical point of view, but also a single taxable person, a VAT group is considered a single VAT taxpayer and the participating entities are jointly and severally liable for VAT (and interest and penalties) to the tax authorities.
The Budget Law 2018 introduced, among other things, amendments to the tax regime concerning dividends from non-resident companies located in low-tax jurisdictions (ie, blacklisted companies). 'Blacklisted companies' are entities resident or located in jurisdictions other than EU or European Economic Area member states, whose ordinary or special tax regime grants a nominal tax rate that is 50% lower than the Italian one.
The recently approved Budget Law has harmonised the taxation of dividends and capital gains earned by non-business individuals on substantial and non-substantial participation held in Italian and foreign companies, among other things. Companies and partnerships will be unaffected by these changes, as the distinction between substantial and non-substantial participation is irrelevant.
The notional interest deduction (NID) regime has been in effect since the 2011 fiscal year. Under this regime, Italian resident companies and permanent establishments of non-resident companies may deduct notional interest from their corporate income taxable base. The NID is calculated according to the equity increase (ie, new equity rate) from the end of the 2010 fiscal year, multiplied by a rate determined annually.
The government recently approved Decree-Law 66/2014, which introduced changes to the taxation of some types of financial income (ie, interest on loans, notes, capital gains and dividend incomes) effective as of July 1 2014, increasing the tax rate from 20% to 26%.
Parliament recently approved the Stability Law 2014. The law contains a number of significant measures affecting individual and corporate taxpayers, including an increase in notional interest rate deductions, introduction of the option for companies to step up the tax cost of business assets and new provisions on the deductibility of payments made under finance lease agreements.
The Italian Revenue Agency recently approved new and revised forms to be used to claim for reimbursement of or exemption from Italian withholding taxes applicable to certain income of non-Italian residents. The agency also approved a standard certificate of tax residence to be filed by Italian residents with foreign tax authorities in order to obtain reimbursement of or exemption from foreign taxes.
Under the Income Tax Code, any capital gain derived by an Italian-resident company is 95% exempt from corporate income tax. Since the participation exemption regime was introduced, the tax authorities have often been asked to consider specific cases involving the residence and the business activity requirements. As a result, Circular Letter 7/E was recently issued to clarify such issues further.
Parliament recently approved the so-called 'Stability Law' for 2013. The law includes a number of significant measures affecting individual and corporate taxpayers. New provisions include an increase in value added tax, the reintroduction of an elective regime providing for a step-up in the tax basis for participation in unlisted 'revaluation' companies and the introduction of a financial transaction tax.
In order to encourage corporate self-financing, the government has introduced the allowance for corporate equity, which enables companies to deduct an amount equal to the notional return on invested capital from their taxable income for income tax and corporation tax purposes. Further deductions are available for regional tax on production as an incentive to employers.
Parliament recently approved an austerity package that aims to present a balanced budget for 2012. Its various provisions - with an estimated financial impact of €54 billion - include a number of significant measures for individual and corporate taxpayers. In particular, companies should be aware of new provisions on carry-forward rules, criminal penalties and dormant companies.
Since 2010 Italy's controlled foreign company rules have applied to foreign subsidiaries that are established in whitelisted jurisdictions. The tax authorities have recently issued a circular which provides new guidelines on the application of the controlled foreign company rules to foreign companies in jurisdictions that are not tax havens.
A circular from the tax authorities provides further details on the Italian tax treatment of trusts. It focuses on when an instrument will be considered a 'sham' trust and must be disregarded for income tax purposes. However, many tax experts have criticised the circular for its basis in a misleading interpretation of trust taxation rules and its disregard for general principles of Italian income tax law.
New legislation has been published which introduces changes to the tax system in respect of real estate investment trusts (REITs). The new provisions are intended to prevent the real estate fund structure from being abused as a vehicle for private investment by a single entrepreneur. They also modify the favourable tax regime for non-resident investors in Italian REITs.
New rules have been introduced on offsetting value-added tax credits against corporation tax, regional income tax and social security contributions. Taxpayers wishing to offset a credit of over €15,000 must have the return confirmed by an authorized professional. For companies subject to the mandatory audit procedure under Article 2409(2) of the Civil Code, the return can be signed by the auditors.
The government has enacted a new tax measure to allow Italian individuals and partnerships to repatriate foreign assets held abroad illegally and to regularize foreign operations. A legislative amendment introduces an extraordinary tax on financial activities and assets - including money, shares, bonds, offshore assets, real estate and works of art.
A new law has made wide-ranging changes to the tax system that particularly affect new companies, banks, insurance companies and real estate investment funds. Among other measures, it introduces a rollover exemption system for start-up capital gains realized on qualified and non-qualified participations.
The government's report on the 2008 Budget includes significant changes to the tax system, particularly with respect to corporate income tax and regional income tax. This update reviews the new provisions in these and other areas, including interest expenses, tax consolidation and accounting standards.
The tax authorities have recently revised their position on the early repayment of medium and long-term loans, returning to the position held before 2006. Ordinary transfer taxes are not levied on bank loans with a term of over 18 months and a more favourable substitute tax at 0.25% of the loan applies, regardless of whether the borrower has the right to repay the loan before the end of the 18-month period.
Since the introduction of provisions to the Income Tax Code aimed at regulating the taxation of trusts and related beneficiaries, the tax treatment applicable to income distribution from foreign opaque trusts has not been clarified by law. A new decree law has filled this legal void by providing for a new class of 'financial income', represented by income paid to Italian resident beneficiaries by non-EU trusts established in low-tax jurisdictions.