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RulingRuling for non-resident companies
A new form of ruling is available for non-resident companies that intend to invest in Italy.
The new system, entered into force on October 7th, 2015 (Legislative Decree no. 147/2015) is aimed at provi- ding a framework of certain and stable tax treatment, regarding their investment plan.

The investor, either resident or non-resident, shall forward its application to the Italian Tax Authorities by pre- senting a business plan, detailing the amount of the investment, the timing and implementation modalities, the expected number of new hires and the consequences of such investment on the Italian tax system.
The procedure applies to investments not lower than Euro 30 million.
International ruling
In order to reach an agreement in advance with the Italian Tax Authority, “enterprises with international activity” may implement a suitable international standard ruling procedure valid for three tax periods, without prejudice to any change in the circumstances resulting from the agreement signed.
The standard ruling procedure mainly regards:
• the correct transfer pricing methodology applicable to the transactions carried out with related par- ties;
• the proper tax treatment with reference to dividends, interest, royalties or other income paid to or re- ceived from non-resident persons in specific cases;
• the proper application of the provisions of the law, including tax treaties, to specific cases related to the attribution of profits or losses to permanent establishments of non-resident enterprises in Italy as well as to permanent establishments abroad of resident enterprises.
International agreements
Italy has undersigned over 90 international treaties to avoid the double taxation of income produced in different countries (see below).

Registration-taxThe Presidential Decree no. 131/1986 provides a list of documents subject to compulsorily registration and documents that, in the event of use, may be registered voluntarily.

In particular with reference to the documents related to real estate, or assets drawn up in Italy, corporate tran- saction papers and documents stipulated abroad that have the purpose of constituting or transferring real rights in intangible assets or companies located in Italy, the lease or rent of such assets must be registered.
The law provides for a different expiry date with reference to the mandatory registration of each documents li- sted, while for the documents subject to registration “in the event of use”, no expiry date is provided.
All the other documents can be voluntarily submitted for registration by anyone with an interest in doing so.
Tax is computed by the competent tax office by applying a tax rate determined by the value set out in the regi- stered document, or by the service contained therein. All applicable rates are stated in the rates sheet attached to the Presidential Decree no. 131/86.
The applicable rate varies from 0.5% to 15%, with reference to the type of the relevant document for registration tax purposes, with a minimum payable of EUR 67. However, for the same type of documents a fixed tax equal to EUR 200 is due.
Please note that also on the documents relating to the sale of assets and provision of services subject to VAT (including non-taxable provisions due to the lack of territorial premises, as well as exempt provisions), a fixed tax equal to EUR 200 is always due.
A notable exception is the leasing of instrumental assets which, despite being subject to VAT, is subject to pro- portional registration tax (1%).
The tax must be paid to the Tax Authorities at the time of registration. Public officials who have drawn up, re- ceived or authenticated the document, those subjects for whom the registration is completed (contracting par- ties or assignees) and real estate agents are all liable for the payment of taxes.

 



Tax-obligationsThroughout the year, the taxpayer is required to comply with a set of obligations depending on the category of taxpayer and the tax applicable. It is important to note that, almost all tax returns and fiscal communications must only be sent by electronic filing.
Compliances relating to direct taxation

According to the Italian Law, for Personal and Corporate Tax purposes, taxpayers have to complete an annual tax return in order to compute and pay taxes for the applicable fiscal year and in advance for the current fiscal year.
The tax return must be drawn up using a standard form yearly approved by the tax authorities.
Individuals and partnerships must file an annual tax return by the end of September of the following tax year, while limited liability companies must file the tax return within nine (9) months of the end of the relevant tax period (usually matching the Financial Statement date).
The tax payments are due into two instalments on account and a balance for the previous year.
The first payment on account for FY and balance related the previous FY must be paid by the last day of the sixth month following the end of the relevant tax period. It is possible to postpone the payment by the last day of the seventh month with an additional payment of an interest rate equal to 0.4%.
The second payment on account must be due within the last day of the eleventh month following the end of the relevant tax period.
IRAP
For IRAP purposes, an annual return has to be drawn up and submitted by the same deadline as the income re- turn.
VAT
An annual Value Added Tax return relating to a calendar year must also be filed before the end of April of the following tax year: it must contain the total of incoming and outgoing operations, tax due, deductions, payments made, tax due as settlement or difference as credit.
Starting from January 1st, 2017 the Taxpayers have to submit to the Italian Tax Authorities the following VAT Communications:
• quarterly communication of VAT settlements return – the relevant deadlines for each quarter are:
- quarter: within the 31st of May;
- quarter: within the 16th of September (only for 2018 1st October 2018);
- quarter: within the 30th of November;
- quarter: within the 28th (or 29th) of February of the following year.
• periodic communication of data of invoices received and issued in the course of the calendar year – the relevant deadlines are:
- quarter: within the 31st of May;
- quarter: within the 16th of September (only for 2018 1st

Municipal-tax-on-propertyIMU is the municipaltax charged on the ownership of buildings, buildable areas and agriculturallands situated within the Italian territory, intended for any use, including property used to performing business activities.
The holder of the property rights, or the real right such as usufruct, use, residence, emphyteusis, or surface right, is required to pay the municipal tax.

In case of a financial lease, the lessee of a real estate is subject to pay this tax. The tax basis is computed as follow:
• for buildings, it is equal to the value obtained multiplying the cadastral rent increase of 5% for a dif- ferent multiplier (from 55 up to 160), based on the cadastral class;
• for building land, it is equal to the commercial value of the land as at January 1st in the FY;
• for agricultural land, it is equal to the cadastral income increased by 25% and multiplied by 135.
Under this special regime, VAT due is calculated with reference to two months before, instead of the month immediately before (Ministerial Circular no. 29 of June 10th, 1991).
Exemptions for IMU purposes:
• the buildings used as first house by the Taxpayer;
• according to the Law 208/2015, starting from FY 2016 the agricultural land, cultivated, owned and run by farmers and professional agricultural entrepreneurs.
Please note that, under certain condition, verified by the municipality, or certified by the owner, 50% of the tax base of buildings unusable and uninhabitable is considered as IMU exempt until the buildings is reusable.
The tax is usually calculated by applying the basic rate of 0.76% to the tax basis.
However, each municipality, as part of its own statutory authority, may vary such a rate by a maximum of 0.3%
(increase or decrease), to determine a range between 0.46% and 1.06%.
The tax amount due is paid in two installments on June 16th and December 16th of each FY.
In the FY 2016 a new Tax on Municipal Indivisible Services (TASI), charged on the ownership of buildings and buildable areas, was introduced.
TASI is applied on the same IMU tax base, with a rate that varies from 0,1% to 0,25%, and tax amount due is paid in two installments on June 16th and December 16th of each FY. Please note that the sum of IMU and TASI rate cannot be higher than the maximum IMU tax rate, equal to Euro 1,06%.

 

 

 

Personal-income-taThis tax is personal and progressive.
The requirement for this tax is the possession of income, in cash or in kind, falling into one of the categories provided by law. The tax period corresponds to the calendar year.

Persons liable for tax
The following subjects are liable for tax:
• natural persons resident in the Italian territory with reference to the entire income owned;
• natural persons not resident within the Italian territory only with reference to the income produced in Italy.
According to the Italian Law, Italian residents are natural persons who, for most of the tax period, meet at least one of the following conditions:
• they are registered in the registers of the population resident in the national territory;
• they are domiciled in Italy (domicile to be understood as the center of interests, including moral and company interests);
• they are resident in Italy (habitual abode).
Tax assessment basis
Tax is applied to the overall income, i.e. the sum of the income of each category, minus any losses deriving from the practice of arts or professions and/or commercial businesses.
The relevant categories include:
• land income, relating to land and buildings located in the Italian territory;
• capital gain;
• income from employment;
• income from self-employed;
• company income;
• sundry income, included income earned from not usual activity of business, arts or professions.
Once the gross income has been determined, any deduction provided by law is applied in order to reduce the tax base.
Deductions are usually equal to 19% of the charges listed in the Italian Tax Code incurred by taxpayer.
The gross tax is computed by applying the increasing rates on the income increases of the net overall income.
The rates currently in force (2018) are as follows:
Regional and municipal IRPEF surtax
In addition to the tax calculated, two additional payments have to be made in favor of the local authorities (Re- gion and Municipality) in which the taxpayer is resident:
• a regional surtax between 1.73% and 3.33% (established by the regional government on a yearly basis),
• a municipal surtax comprising of a first rate established each year by the state and applied throughout the national territory and a second rate not exceeding 0.8% p.a. established by the individual munici- pality (under some circumstances the rate could rise by a further 0.3%).
Tax on income of non-residents
The personal Income Tax (IRPEF) is applied to resident and non-resident individuals. Resident individuals are

Value-added-tax-1VAT is a general tax on consumption applied on the “value added” on goods and services, in particular tax is due on the increase in value of goods or services in the different phases of production and trade, until it reaches the final consumer who suffers the full cost of the tax.

Tax assessment basis and rates
The transactions are subject to VAT if the following requirements are met:
• objective requirement: there must be a transfer of goods or provision of services;
• subjective requirement: the operations must be carried out within the running of business or the prac- ticing of arts and professions;
• territorial requirement: the operations must be carried out within the Italian territory.
For VAT purposes, the “Italian territory” is considered to be the territory of the Italian Republic, excluding the Municipalities of Livigno, Campione di Italia and the waters of Lake of Lugano included in the Italian territory.
VAT substantially applies to the following operations:
• transfer of goods made in Italy while running business or practicing arts and professions;
• provision of services in Italy while running business or practicing arts and professions;
• intra-EU purchases of goods from another EU member state while running businesses or practicing arts and professions;
• purchases made by foreign countries of some services carried out in Italy while running businesses or practicing arts and professions;
• imports of goods from non-EU countries, made by anyone.
However, VAT does not apply to all the aforesaid operations carried out in the Italian territory. Some operations are, in fact, tax exempt, while others fall outside the scope of VAT.
The transactions VAT exempt are operations in compliance with the three above requirements, but they are ex- cluded from VAT application by express provision of law, such as financial expenses, medical services, insu- rance premiums, etc. While the operations out of VAT scope are not compliant at least with one of the requirements.
Applicable rates
The ordinary rate is 22%.
In addition to the ordinary rate, there are three reduced rates, 10%, 5% and 4%, and the “zero” rate which applies to certain so-called “non taxable” operations (exports of goods, provision of some international services or ser- vices relating to the international trade, transfers of goods to another EU Member State, provision of some ser- vices connected to transfers of goods to another EU Member State).
The Budget Law 2018 provides for an increase of the VAT rates

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