Italy

The major recent changes in the Italian tax rules that occurred in the last 12 months are the following:

• Approval of several corporate income tax (CIT) provisions.
• Enhancement of Tax Control Framework and Cooperative compliance regime.
• Introduction of VAT and other taxes provisions modifications.
• Approval of different regulations in the area of tax credits and incentives.

Please note that Italy tax updates are generally expected to occur between November and December in connection with the Budget Law and approval of related implementing laws.

     Approval of several CIT provisions

The 2024 Budget Law and other Legislative Decrees implementing the Review of the Italian Tax System, introduced a number of different provisions on CIT matters. Here below the main measures:

• The deadlines for filing IRES and IRAP tax returns are anticipated at the last day of the ninth month following the close of the tax period (i.e. 30 September for those closing the fiscal year on 31 December).
• From FY 2024 onward, the notional interest deduction (NID or "ACE") is repealed, allowing the use of any surplus credits from previous periods until exhausted.
• For FY 2024, companies hiring permanent employees will benefit, at certain conditions, of a 20% increase in the personnel cost deduction.
• As from FY 2024 CFC simplifications are introduced. 
• Capital gains realized by European Union (EU) or European Economic Area (EEA) companies and entities, without a permanent establishment in Italy, with respect to the sale of qualified participations, having PEX requirements, where taxable also in Italy, from 1 January 2024 are subject to taxation on only 5% of their amount.
• From 1 July 2024, the off-setting of tax credit is prevented, in case of expired roles or executive tax assessments exceeding Euro 100.000.
• Pending approval from the European Commission, a proposed 50% reduction in corporate income tax and IRAP tax is allowed for business and professional income transferred to Italy from a non-EU/EEA country for at least six fiscal year.
• Option for Italian GAAP adopters in ordinary accounting to adjust inventories to the actual inventory situation for the tax period in progress at 30 September 2023. 
• New tax residence definitions for corporations have been introduced.

Enhancement of Tax Control Framework and Cooperative compliance regime

For Cooperative compliance regime is granted additional certainty to taxpayers that intend to invest in transparency towards the Tax Authorities. In particular: i) significantly reduction of the assessment terms; ii) enhanced reward in term of penalty regime. Entities not eligible can apply for an optional regime provided that a certified tax control framework is in place.

Introduction of several VAT and other taxes provisions

The following provisions have been introduced, among others: 

• Increase in the VAT rate from 5% to 10% for child products and female hygiene protection and to 22% for child seats to be installed in motor vehicles.
• Payment of VAT in case of the elimination of stock for entities adopting Italian Gaap.
• Tax on the consumption on single use manufactured goods (“Plastic tax“) and on sweetened soft drinks (“Sugar tax“), previously planned for 1 January 2024, is postponed to 1 July 2024.

Tax credits and incentives

The following provisions have been approved, among others:

• From 1 January 2024 the maximum amount of de minimis aid per single undertaking, is increased to Eur 300,000 over three years (instead of the Eur 200,000 applicable until FY 2023).
• An obligation is introduced for companies with legal headquarters in Italy or having legal headquarters abroad with a permanent establishment in Italy to arrange catastrophic risk insurance by 31 December 2024. Non-compliance may lead to adverse consequences concerning requests for public incentives.