Assonime Analyses The Italian Pex Regime For Non-Residents.
Update Of The List Of The Countries That Exchanges Data On Bank Accounts.
The Withholding Exemption On Proceeds Distributed By Italian Funds Also Applies To Canadian Funds.
In-Bound Workers Regime May Be Enjoyed Even Trhough A Tax Refund Request.
Determination Of The Taxable Amount On The Contribution In Kind Of Immovable Property.
Assonime Analyses The Italian Pex Regime For Non-Residents
With its circular letter no. 10 of 2 May 2024, Assonime has analysed the newly enacted participation exemption regime for non-resident companies and entities, which allows such entities to tax gains derived from the transfer of shareholdings in Italian companies considering as a taxable base only 5% of the gain actually realized. This to the extent that such gains are actually taxable in Italy according to the relevant tax treaty.
The main interpretative points that the circular touches upon are the followings:
• the nature of the transferring entity. Despite the rule mentioning foreign companies without a permanent establishment in Italy, the exemption also applies to gains realized by foreign companies with an Italian permanent establishment, if the transferred share-holding is not related to the permanent establish-ment;
• there is no minimum residency period required for the transferring company in the European Union or the European Economic Area;
• the requirements of the transferred shareholding as per article 87(1) of the TUIR, which must be evaluat-ed at the time of the share transfer, not at the subse-quent receipt of the relevant consideration;
• the effective date of the new rule, which applies to gains realized (completed transfers) from January 1, 2024.
Update Of The List Of The Countries That Exchanges Data On Bank Accounts
With the ordinance issued on 2 May 2024, the Ministry of Economy and Finance has carried out the annual revision of Annexes C and D of the Ministerial Decree dated 28 December 2015, which contain the list of the countries with which Italy carries out automatic exchange of bank accounts information.
Georgia, Kenya, Thailand, Costa Rica, and Saint Kitts and Nevis have been included in Annex C (containing a list of the countries to which Italy commits to provide data on bank accounts held in Italy by their residents), bringing the total number of countries listed to 87.
On the other hand, Georgia, Kenya, and Thailand have been included in Annex D (containing a list of the countries from which Italy receives data on foreign bank accounts of its residents), increasing the total number of listed countries to 113.
The withholding exemption on proceeds distributed by Italian funds also applies to Canadian funds
According to the Italian Tax Authorities ruling reply no. 104 of 13 May 2024, the withholding exemption regime on proceeds distributed by Italian real-estate funds (provided for by pursuant Article 7(3) of Law Decree no. 351/2001) is applicable to proceeds paid by Italian real estate funds and received by a Canadian pension fund, through its 100% partici¬pation in a special purpose vehicle (also located in Canada).
In the at stake, the Canadian pension fund (a country included in the relevant Italian white-List) meets the same substantive requirements and investment purpose of an Italian pension fund and the company, which administers and manages the pension fund, is subject to prudential supervision.
A self-certification from the Canadian pension fund attesting its residence in the white-List country and a certificate issued by the regulatory authority of the State of residence regarding the prudential supervision requirement are needed in order for the exemption to apply. If the competent authority does not issue such certificate, then the interested party may use other appropriate documentation proving the existence of the supervisory requirement to claim the exemption
The italian tax authorities analyse the new obligations for intermediaries involved in short-term rentals
With its Circular Letter no. 10 of 10 May 2024, the Italian Tax Authorities have examined the novelties arising from Art. 1(63) of Law no. 213/2023 (Budget Law 2024) concerning short leases.
The main news that has been analysed are the followings:
• the increase in the rate of the flat-rate tax on short-term rentals (from 21% to 26%). It is possible to indi-cate in the tax return only one property to which the 21% rate will continue to be applied;
• the amendments to the obligations of non-resident intermediaries.
Finally, even though the rate has been raised to 26%, there is no change in the amount of the withholding tax operated by intermediaries involved in the payment or collection of short-term rental fees (which is still equal to 21%). This withholding qualifies as a provisional withholding.
The Italian Ministry Of Finance Issued A Decree Implementing The Pillar Two Transitional Safe Harbour
The Ministerial Decree dated 20 May 2024 issued by the Ministry of Finance contains the implementing provisions of the so-called “transitional CbCR safe harbour” of the Pillar Two regulation.
The “transitional CbCR safe harbour” contains three different tests:
• the de minimis test, which is met if the group has, in a given jurisdiction, less than EUR 10 million of CbCR revenues and less than EUR 1 million of CbCR profit before tax (or a pre-tax loss);
• the simplified ETR test (simplified effective tax rate test), which is met if the group register, for a given jurisdiction, a simplified effective tax rate at least equal to the so-called ‘transitional tax rate’ (15% for fiscal years starting in 2023 or 2024, 16% for fiscal years starting in 2025 and 17% for fiscal years start-ing in 2026);
• the routine profit test, which is met if the group’s profit before tax in a jurisdiction does not exceed the amount of the SBIE calculated for the same jurisdic-tion
In-Bound Workers Regime May Be Enjoyed Even Trhough A Tax Refund Request
According to the tax court of second instance in Lombardy, decision no. 1458 no. 20 May 2024, where the requirements for the in-bound workers regime to apply are met, if the employer has not directly applied the tax regime, it is possible for the employee to ask for the refund of the amount paid in the tax return or to file for a reimbursement within 48 months from the day the (excess) payment or the (excess) withholding was made.
Determination of the taxable amount on the contribution in kind of immovable property
In its decision no. C-241/23 on 8 May 2024, the European Court of Justice dealt with a case whereby a company determined the tax on goods and services in its tax return based on invoices received for non-cash contributions made in exchange for shares, the value of which was calculated on the basis of the issue value of the shares.
The tax authorities disagreed with the company’s approach, arguing that the taxable amount should be based on the nominal value of the shares. The question whether the consideration obtained or to be obtained by the supplier in return for a supply of goods, ought to be understood as meaning the nominal value of the shares acquired or the issue value, if the parties have stipulated that the consideration is to be the issue value of the shares was brought to the European Court of Justice, which ruled that the taxable amount of a contribution of immovable property by a first company to the capital of a second company in exchange for shares of the latter must be determined on the basis of the issue value of those shares where those companies have agreed that the consideration for that contribution to the capital will consist of that issue value.
Proposal Directive For A Simplified Procedure For Refunds On Withholding Taxes On Dividends And Interest
On 14 May 2024, an agreement was reached at the Ecofin Council on the proposal for a so-called FASTER directive, presented by the European Commission on 19 June 2023, which aims to simplify the procedures for the elimination of double taxation on dividends and interest paid to investors resident in foreign states.
To this end, a digital certificate of common tax residence within the EU (eTRC) is to be introduced, with which investors will be able to obtain a withholding tax exemption.
The Directive provides for two accelerated procedures that complement the standard refund procedure:
• the “exemption at source”, whereby the rate (domes-tic or under tax treaties) is applied at the time of payment of dividends and interest;
• the “rapid refund”, where the refund of the excess withholding tax is granted within a set time limit.
Member States will transpose the content by 31 December 2028 with national rules coming into force from 1 January 2030.
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