Individual - Significant developments

Last reviewed - 01 June 2020
  • Article 8 of the Finance Law for 2020 (FL 2020) introduced an important measure, which consists of a reduction in the turnover limit for taxpayers subject to the unique flat-rate tax regime (IFU). It also excludes legal persons and non-commercial professions from this regime, which only entitles individuals/natural persons to be liable under such regime.
  • Article 16 of FL 2020 amends the provisions of Article 87bis of the CIDTA, which seeks to include in the Personal Income Tax (IRG) base all profits that have been taxed at corporate income tax (CIT) at the corporate level, with the exception of any specifically exempt profits. We understand that this measure aims to submit the income of physical persons derived from the distribution of profits that have been subject to CIT to the IRG at the flat rate of 15%.
  • Article 15 of FL 2020 supplements Article 46 of the CIDTA by introducing a new provision concerning the taxation of profits of companies that have not been allocated to the company's reserves within three years. From this point forward, generated profits that have not been allocated within three years are considered as distributed income and are taxed as such. However, the application of this measure has been suspended by the tax administration until further notice.