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Taxnews no. 4 - 23.3.2016

Tax Newsletter

no. 4 - March 23, 2016


Subject:  Preventive queries regarding new investments in Italy, as provided by the 2015 decree on the internationalization of businesses (Tax Ruling).

The implementing decree is soon to be issued by the Ministry of the Economy and Finance (“MEF”)

Legislative Decree 147/2015, on the growth and internationalization of enterprises, introduced the option, available to both Italian and foreign companies, to submit queries to the Revenue Agency in order to obtain a Tax Ruling on  aspects of an investment plan they have in mind, and on the corporate transactions with which they would implement their investment. Accordingly, Italian and foreign companies that decide to make new investments in Italy can rely on transparent and unambiguous rules.  The implementation decree is expected to be issued shortly by the Ministry of the Economy and Finance.

1.  The investing companies concerned

The new preventive query can be submitted by any enterprise that intends to make investments in Italy that total at least thirty million euros and that will have significant and long-lasting effects on employment in the business sector concerned. The investments in question can also be aimed at restructuring companies that have fallen into critical conditions, if such investments are expected to have a positive impact on employment.

2.  Further questions that can be asked

This type of query can also request a preventive evaluation of the possible absence of any abuse of tax law or of evasion; of the existence of the conditions required to avoid application of anti-evasion measures; or of access to any regimes or procedures established by the tax system: all of these questions being posed in relation to the hypothetical investment plan and to non-recurrent transactions that might be used to carry it out.

For example (as clarified in the report describing the decree), the Tax Ruling asked of the Revenue Agency can simultaneously concern access to the national or worldwide consolidation regime, non-application of the CFC rule, access to PEX (participation exemption) on dividends and capital gains, the VAT treatment applicable to the taxpayer’s business, etc.

3.  The Revenue Agency’s Ruling

After the taxpayer has filed its query, the Revenue Agency is required to give it a written reply within 120 days; this deadline can be postponed by another 90 days if the Agency needs more information. If the Agency does not deliver its reply to the taxpayer within 120 days (or by the postponed deadline), it is understood that the Agency agrees with the taxpayer’s interpretation or with the type of behavior that the taxpayer thinks is legitimate (the so-called silence = assent rule). 

The Finance Administration’s reply is binding upon it, and shall continue to be valid as long as the circumstances of fact or law on which the reply was based remain unchanged. In fact, the decree provides that any act done by the Finance Administration (imposition of a tax or fine) that is not consistent with the reply already given to the taxpayer is null and void.  Once a year the Revenue Agency shall publish a summary of the interpretations of general interest that it has provided to taxpayers’ queries.

4.  The implementing decree soon to be issued by the MEF

The decree soon to be issued will define the types of investment concerned and the procedures to be followed in submitting queries to the Revenue Agency. In particular, the draft version of the decree establishes that the query submitted by an individual company or group of companies must include a precise and detailed description of the investment plan whose exact tax treatment it wishes to know (plan to be attached to the query), and of all the corporate transactions with which it would implement the plan. The query must also specify the timeframe, amounts and methods used to quantify the investment, and the effects it would have on employment. The taxpayer can also convey to the Finance Administration its own interpretation of the tax treatment of the investment and of the related transactions. Moreover, the decree provides for the establishment of a direct dialog with the Finance Administration, which can summon the taxpayer to discuss the query and verify its propriety. If necessary, the Administration can also visit the company’s premises (as previously scheduled with the company) in order to acquire direct knowledge of information useful for dealing with the query.

We will be happy to provide any clarification and verification you may wish on the new query procedure.  

We have taken the greatest care in preparing the above News for our clients’ prompt and concise information. It they are used as a basis for decisions or in applying the regulations described, our clients are welcome to make specific queries we shall be happy to answer in all necessary details.
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