Italian tax alert

1. - Italian austerity package
- Italian exit tax
- European Attraction Regime
Andrea Brignoli and Maurizio Di Salvo
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WU - Wirtschaftsuniversität Wien
LLM in International Taxation – Tax Talks 15th March 2012

2. Italy … Tax Highlights…
- Worldwide taxation for resident taxpayers; limited taxation for
nonresidents tax payers;
- Corporate income tax: IRES 27,5% (+6,5% for electricity and gas);
- Regional tax for business and professionals: IRAP 3,9% up to 6,82%
on EBIT + costs of personal;
- Individual tax rate: progressive from 23% up to 43% +3% over €
300.000:
- VAT rates: 21% standard, 10% and 4% reduced;
- n. 91 treaties in force with respect to taxes on income and on capital;
- CFC regime; Real estate tax; inheritance and gift tax; registration
tax; capital gains tax; minimum tax for dormant companies;
consolidation regime (domestic and worldwide); PEX; carry forward
losses.
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3. On 14 September 2011, the Italian Parliament approved the austerity package
(Law Decree 138/2011) and on 29 December 2011, approved the Law Decree
216/2011 containing a set of extraordinary measures to address the financial
crisis and stabilize public finances.
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REVENUES
- New stamp duty on income previously subjected to the tax amnesty
(1% for 2012, 1,35% for 2013, 0,4% for the future);
- Possible new increase of the VAT rate starting from September 2012;
regular rate from 21% to 23%, the reduced rate from 10% to 12%
- Additional tax for luxury goods (i.e. boats, aircrafts, and luxury cars);
- Reintroduction of municipal tax on real estate (IMU) (for first home of
individuals and buildings held by churches for commercial purposes);
- Capital Gain tax for individuals will rise from 12,5% to 20%;
- Increase of stamp duty rate for bank accounts (€ 34 up to € 100);
- New tax on buildings and financial activities existing abroad by resident
individuals;
Italian Austerity package
L.D. 216/11

4. 4
SPENDING CUTS MAESURES, INCENTIVES and OTHER…
- reduction to financing to the Provinces;
- pension age will rise to 62 for woman and 66 for man;
- notional deduction of 3% of the corporate income tax base for
equity increase (contributions in cash or retained earnings);
- deduction of IRAP from the corporate income tax base;
- new powers to Italian Tax Authorities and Tax Police especially
on bank secrecy;
- use of cash limited to € 1.000 for all transactions;
- tax on bank interests from 27% to 20%;
- New deadlines for tax debts in the case of financial problems.
Italian Austerity package
L.D. 216/11

5. 5
Some international details …
Taxation on buildings and financial activities existing
abroad owned by resident individuals:
-0,76% on R.E. market value (or land registry in EU
and EFTA);
-0,1% on market value of financial assets (€ 34,20
for assets in EU and EFTA!!!)
For EU and EFTA citizens use of cash is limited to €
1.000 for each transaction.
Citizens with other nationality can avoid this limit
just showing their passport.
Italian Austerity package
L.D. 216/11

6. Italian Exit Tax
Art. 166 of the Italian Tax Code (TUIR) – before the
amendments
• Premises: Italian resident companies are those which for the
greater part of the tax year have had their legal seat, place of
effective management or main business purpose in Italy. The
place of incorporation is not relevant (art. 73 par 3 TUIR);
• Under the Italian civil law (art 2437 civil code), the transfer
abroad of the residence of a company is permitted, should the
achieving State allows such transfer by its side (reciprocity
principle);
• The transfer abroad of the residence of an Italian resident
company is not neutral, under a fiscal point of view (art. 166
TUIR).
• According to the provision, the transfer abroad of the residence of
a company for corporate income tax purposes is considered the
sale, at market value, of the assets of the business, unless they
remain part of a permanent establishment in Italy; 6

7. Italian Exit Tax
Art. 166 of the Italian Tax Code (TUIR)
• On 24 January 2012, the Parliament approved Law Decree 1/2012
which provides, inter alia, for amendments to the exit tax
provision included in article 166 of the Income Tax Code (TUIR);
• The taxation of the deemed capital gain pertaining to the assets
transferred may be suspended (on an optional basis) until the
actual realization, provided that the residence is transferred within
the EU or the EFTA: the new exit tax provision is in line with the
ECJ Case C-71/2010 (National Grid Indus BV).
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8. European Attraction Regime
Law Decree no. 78/2010, implemented by Law
122/2010
• Article 41 of Law Decree no. 78 /2010 introduced a provision
aimed at encouraging foreign companies resident in a Member
State of the European Union, which intends to start up new
economic activities in Italy, allowing them to select one of the tax
regimes in force in the other Member States of the European
Union instead of that in force in Italy;
• The implementing provisions are not yet enacted;
• Topic: the foreign company may select to replace the Italian
regime that is to be referred to the “Italian State Tax Legislation”
(accordingly local taxes which may be imposed – i.e. additional
taxes, Irap, etc.- are excluded from the scope of the provision).
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9. European Attraction Regime
Law Decree no. 78/2010, implemented by Law
122/2010
• The option to apply the foreign tax regime cannot be just adopted
by companies but also by their employees and consultants, who
have their tax residence in Italy: interested parties must submit
an application according to the international ruling procedure
under article 8 of Law Decree no. 269 of 30th September 2003.
• In order to benefit from the “alternate” tax regime for 3 years,
two requirements in relation to the economic activities to be
started up must be met:
1. not be existing as of 31st May 2010 (date of entry into force of
the law-decree);
2. be actually performed within the territory of Italy.
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Dr. Andrea Brignoli
Tax Advisor and Registered Auditor in
Bergamo
andrea.brignoli.studiolucchini@acbgroup.com
GRAZIE!
Avv. Maurizio di Salvo
Tax lawyer, Tax Advisor and Registered
Auditor in Milano
disalvo@vergalloassociati.it