Italy: The Italian Investment Management Exemption law: new implementing rules

Explore the new flyer on personnel secondment in Italy, created by WTS R&A. The flyer covers key insights on VAT treatment, recent legal changes, and the impact of the CJEU ruling on Italian tax law.

In 2023 Italy amended the domestic permanent establishment (“PE”) definition provided by Article 162 of Italian Income Tax Code by introducing the so-called “Investment Management Exemption” (hereinafter “IME”), which constitutes a PE “safe harbor” for asset managers of foreign investment vehicles.

News on tax developments affecting the international Financial Services industry.

VAT obligations of Italian PEs/FEs: recent instructions by the Revenue Agency may be critical to business practice

Effective from 1st January 2023, the Law introduces a range of tax measures that multinational enterprises (MNEs) operating in Italy may find noteworthy.

With a series of recently published rulings, the Italian Tax Authorities have provided some helpful interpretations of recurring cross-border tax issues.

VAT deduction rules are different during the year and at the end of the year, so particular attention has to be paid in order to properly detect the initial and the final terms for VAT deduction.

With the reply to ruling No. 5078 of 12 October 2022, the Italian tax authorities issued important indications as to whether digital currency mining activity should be subject to VAT and direct taxation.

With its ruling of 11 May 2022 (n.14908), the Italian Supreme Court stated the principle that penalties must be proportional to the Customs Law violation committed

On 6 and 7 July 2022, the Italian Supreme Court ruled in multiple cases that Italian WHT levied on Italian dividends distributed to non-Italian investment funds is incompatible with EU law.

The Italian Tax Agency recently issued a ruling (No. 78/E dated December 31, 2021) analyz­ing the application of the DAC6 legislation with respect to TP adjustments.

In a recent case, Italian Tax Authorities have returned to the debated theme of taxation of Italian source pensions paid to non-resident individuals.

This reengineering process, whose release deadline, for customs declarations for imported goods, is set at 9 June 2022, provides for a radical restructuring of processes to seize the opportunities offered by real “digitization”.

The document analyses the provisions contained in the Articles 6 to 11 of the Legislative Decree 142/2018.

With Circular Letter no. 40/2021 of 14 December 2021, the Agency for Excise, Customs and Monopolies (ADM) has provided some operational clarifications regarding imports made by entrepreneurs not established in the EU.

On 26 November 2021, Italian Revenue Agency published Circular Letter no. 15/E (the “Circular”) providing clarifications on the TP documentation rules contained in the Instruction.

After the expiration of the former authorisation on 31 December 2021, Italy has been authorised until 31 December 2024 to accept e-invoices via SDI only if they are issued by taxable persons established in Italy (Council implementing Decision (EU) 2021/2251 of 13 December 2021).

The Italian supreme court has highlighted two concepts related to the responsibility of the importer in the event that the certificate of origin is proven to be false and the sanctions applicable to the importer.

The Italian tax authorities have recently ruled that the domestic WHT exemption granted to certain foreign investment funds and other qualified investors on interest deriving from medium / long term loans is not applicable to interests paid through an intermediate entity, thus rejecting a “look through” approach.

The Italian measures adopted in connection with the COVID-19 pandemic include specific rules concerning the Regional Tax on Production Activities (IRAP) payment.

A change in the interpretation provided by the Italian Tax Authorities.

In commercial practise the ex-works state to the sale of goods intended for export as a delivery term agreed between the seller and the buyer is frequently applied; this condition provides that the seller is only required to make the goods available to the buyer in its own company and it is the buyer who takes care of the transport of the same outside the EU territory.

As part of the initiatives adopted by the Customs and Monopolies Agency (ADM) to support economic operators, the possibility of streamlining the process relating to reintroduction activities for the release for free circulation of previously exported goods was recognised. This relief is granted if the goods are reintroduced in the state in which they were exported.

Article 110 of Decree Law No. 104 of 2020 contains a measure of great interest for companies, introducing the possibility to step-up the costs of tangible and intangible assets in the financial statements. The step-up can be carried out to tangible assets, intangible assets and shareholdings in controlled and associated companies.

In Italy, new rules came into force regarding the structure, content and submission of the transfer pricing documentation. These changes apply to both the master file and the local file and have significant implications for the taxpayer.

Following the 2021 Italian Budget Law, dividends and capital gains deriving by certain foreign EU/EEA UCIs are not subject to Italian taxation, either by way of WHT or substitute tax, starting from January 1, 2021.

Italy is taking the next steps in digitalising compliance procedures. 

In this article you will learn more about the newly introduced withholding tax exemptions on dividends and capital gains in Italy.

Information about the amendments of the Italian tax regime for “impatriates”.

Since 1 January 2020, Italy has had a Digital Service Tax (“DST”). On 17 December 2020, after almost one year after the DST had entered into force, the Italian Tax Authorities (“ITA”) issued a draft document (the “Draft”) that has provided further explanation and clarification on the DST. The Draft was also open to public consultation until the end of 2020.

The COVID-19 health crisis has led to an exponential spread of the recourse to the remote-working mode, given that the health and safety policies adopted by employers define remote work as a key prevention measure.

In Italy, a new Legislative Decree came into force to ensure a more effective EU transfer pricing dispute resolution mechanism.

New technical instructions have been approved for the mandatory implementation of the electronic invoicing process between private entities.

An overview on recent case laws in Italy.

Social contributions relief, paternity leave for employees and increasing amount of smart workers

The 2019 Italian Budget Law, still in a draft version undergoing final approval, introduced a new tax on revenues from qualifying “digital services” (Digital Service Tax, “DST”).

CECP provides the opportunity to assess the risk of existence of a permanent establishment in Italy and its attributable CIT and VAT taxable base for large multinational groups

Eliminating economic double taxation may become easier in the future thanks to recent statutory and practice developments

New VAT measures focus on B2C supplies of products that are facilitated by entities

The Italian Tax Authorities approved the form “AGI/1”

E-invoicing will become mandatory for all B2B and B2C supplies of goods and provisions of services

New Article 110 (7) of the ICT includes a specific reference to the arm’s-length principle and provisions issued by the Ministry of Finance

Tax Management International Forum organized by Bloomberg Tax will be held in Paris on 20.04.2018