The major recent changes in the Italian tax rules that occurred in the last 12 months are the following:
- Corporate income tax (imposta sul reddito sulle società or IRES) rate reduction.
- New tax deadlines.
- Super and hyper tax depreciation.
- Changes to allowance for corporate equity (ACE).
- New value-added tax (VAT) fulfilments.
- Integrative return 'in favour' of taxpayers.
- Changes to option for special tax regimes.
- Revisions to tax havens ('black list') and to controlled foreign company (CFC) rules.
- Changes to statute of limitations.
- Introduction of a country-by-country (CbC) report.
- Changes in the 'extraordinary' income regime.
- Introduction of domestic tax consolidation between 'sister' companies.
- Review of the tax ruling procedures.
Please note that Italy tax updates are generally expected to occur between November and December in connection with the finance bill and approval of related laws.
IRES rate reduction
Starting from fiscal year (FY) 2017, the standard IRES rate is reduced from 27.5% to 24%.
New tax deadlines
Starting from 1 January 2017, some tax deadlines are changed. In detail:
- Settlement and first advance payment for IRES and region production tax (imposta regionale sulle attività produttive or IRAP) purposes will be due by the last day of the sixth month following the year-end (previously, the 16th day of the sixth month following the year-end).
- VAT return will be filed on 28 February 2017 for FY 2016 and, for the following years, on 30 April (previously, 30 September).
Super and hyper tax depreciation
For new investments on tangible assets, the additional IRES depreciation (so-called 'super depreciation') has been extended to FY 2017. In this respect, the purchase cost is increased by 40%, bringing the taxable basis of the asset to 140%.
For new investments carried out in FY 2017 in hi-tech, cloud, ultra-broad band, industrial robotics, digital manufacturing, IT security, etc., for tax depreciation a notional increase of the purchase cost of 150% has been introduced, bringing the IRES base of the asset to 250% (so-called 'hyper depreciation'). Specific supporting documentation is required to benefit from this provision.
Changes to allowance for corporate equity (ACE)
The rate applicable to ACE deduction has been changed from 4.75% in FY 2016 to:
- 2.3% for FY 2017.
- 2.7% for FY 2018 and onwards.
New VAT fulfilments
Starting from FY 2017, new obligations are introduced. In particular, the quarterly communications of:
- VAT balances and
- data of invoices issued and received
will have to be periodically filed to the tax authorities to allow advance controls over the taxpayers.
Integrative return 'in favour' of taxpayers
The possibility to file an integrative tax return in favour of taxpayers within the deadlines of tax assessment has been introduced.
Changes to option for special tax regimes
From FY 2017 onwards, the automatic renewal for special regimes, such as Domestic tax consolidation, is provided.
Revisions to tax havens ('black list') and to CFC rules
As of FY 2016, expenses for transactions with tax havens are fully deductible and not subject to disclosure in the tax return. In addition, in the CFC rules, the reference to ‘black list’ countries has been repealed.
Changes to statute of limitations
As of FY 2016, the Italian tax authorities are entitled to make an assessment up to the end of the fifth calendar year following the year in which the tax return was filed (previously the deadline was the fourth calendar year).
Introduction of CbC reporting
For resident parent companies of groups that are obligated to file consolidated financial statements, with consolidated revenues in the previous year of at least 750 million euros (EUR), CbC reporting has been introduced.
Changes in the 'extraordinary' income regime
As of FY 2016, a new regime has been introduced regarding the waiver of credits by the shareholders.
Introduction of domestic tax consolidation between 'sister' companies
Following the European Court of Justice (ECJ) decision against tax consolidation regimes, which do not allow the consolidation of 'sister' companies held by a European Union (EU)/European Economic Area (EEA) resident, the domestic tax consolidation regime has been extended to 'sister' companies controlled by the same non-resident entity.
Review of the tax ruling procedures
Relevant developments have been introduced to the Italian tax ruling procedures and to the regime of ‘ruling on new investments’ for those enterprises that intend to make investments in Italy.