The longer time threshold also applies for self-employed benefitting from the in-bound workers
Longer time threshold for the inbound workers regime applies also with different employers
Employment income derived from a German cultural institution is taxable only in Germany
Italian transfer pricing rules also apply to interest-free loans
Withholding exemption on interest might apply also to indirect recipients
Companies in cooperative compliance do not need to meet the directives holding periods
Differences arising from accounting policies may not give rise to hybrid mismatches
ITAly issues a decree on notification obligations for Pillar Two purposes
Italian stamp duties come due even for communication sent to foreign companies
Clarifications on the documents needed to prove the existence of an intra-community supply
The OECD issued the consolidated report on Amount B of Pillar One
The longer time threshold also applies for self-employed benefitting from the in-bound workers
Pursuant to ruling no. 22 of 7 February 2025, in order to benefit from the in-bound workers regime, the requirement of having spent six or seven years abroad (instead of the ordinary three pursuant to Article 5(1) letter b) of Legislative Decree 209/2023) must also be complied by individuals who were previously employed and, after moving to Italy, establish a self-employment relationship with the former employer and invoice the latter for their services.
According to the Italian Tax Authorities, indeed, the abovementioned rule shall apply to any job relationship, thus also self-employment relationships.
Longer time threshold for the inbound workers regime applies also with different employers
With their ruling no. 53 of 28 February 2025, the Italian Tax Authorities claimed that the extension to six or seven years of the time requirements provided for the in-bound workers regime must be interpreted as meaning that this longer time threshold applies even if, in the last fiscal year before moving to Italy, the individual has also worked abroad on behalf of an employer different from the one hiring him in Italy or as a self-employed person.
Employment income derived from a German cultural institution is taxable only in Germany
The Italian Tax Authorities, with their ruling no. 32 of 13 February 2025, have examined the treatment of the remuneration paid to an individual residing in Italy having dual citizenship (Italian and German) for work activities performed in Italy for a German cultural institution financed entirely by Germany. According to the Italian Tax Authorities’ opinion, the employment income falls within the scope of Art. 19 of the ItalyGermany Tax treaty, according to which such income is taxable only by the State that pays the remuneration, and not of the exceptions provided for by Art. 19 of the same treaty which instead provide for an exclusive right to tax in favour of the residence State if the relevant person is an Italian citizen and not also a German citizen (a circumstance which is not met in the case analyzed).
Italian transfer pricing rules also apply to interest-free loans
The Italian Supreme Court, with its decision no. 3223 of 10 February 2025, ruled on the applicability of the Italian transfer pricing regulation referred to in Art. 110(7) of the TUIR, to intra-group non-interest-bearing loans. The Italian Supreme Court maintained that the transfer pricing regulation is applicable also with respect such kind of arrangements, even in the formal absence of a price. With regard to the burden of proof, the Italian Supreme Court stated that it is first up to the Tax Authorities to demonstrate that the financing took place not at arms’ length. It is then up to the taxpayer to demonstrate that the interest on the loan is determined at arms’ length, or, in the case of interest-free loans, that there are sound commercial reasons to justify the absence of any interest charge.
Withholding exemption on interest might apply also to indirect recipients
According to the Italian Supreme Court’s decision no. 4427 of 20 February 2025:
• for the purposes of the withholding exemption on interest on medium-long term loans paid to nonresident companies and entities pursuant to Art. 26(5-bis) of Presidential Decree 600/73, the subjective requirements provided for by such provision do not necessarily need to be verified by the direct recipient;
•if, in fact, this direct recipient pays interest to a person who is the actual lender of the loan and the beneficial owner of the income, then the withholding exemption requirements should be met by the latter.
The withholding exemption was therefore granted in relation to the interest paid by an Italian company to its Luxembourg parent company (a company which did not meet the subjective requirements to benefit from the exemption) since such company was held by a sole shareholder – a Luxembourg investment fund – qualified as the beneficial owner of interest paid by the Italian borrower and met the subjective requirement provided for by the law.
Companies in cooperative compliance do not need to meet the directives holding periods
According to rulings no. 48 and 49 of 25 February 2025, dividends, interest and royalties paid to non-resident companies party to the same group of the payer may benefit from the withholding tax exemptions provided for by Artt. 25, 26 and 27 of Presidential Decree 600/73 even if the payment occurs before the holding period (equal to one year according to Arts. 27-bis and 26-quater of Presidential Decree 600/73, transposing in Italy respectively the provisions of the Parent-Subsidiary Directive and the Interest&Royalty Directive) is met, if the Italian companies that pay the income have adhered to the Italian cooperative compliance regime. The principles are outlined:
•in the answer to ruling no. 48 of 25 February 2025, referring to dividends paid to a Dutch parent company;
•in the answer to ruling no. 49 of 25 February 2025, referring to interest paid to a Swiss parent company (in such case, the minimum holding period is increased to two years).
Differences arising from accounting policies may not give rise to hybrid mismatches
With ruling no. 47 of 25 February 2025 the Italian Tax Authorities have delved into the configurability (or not) of a hybrid mismatch falling within the scope of the Italian anti-hybrid measures in relation to internal dealings occurring between a parent company in Italy and its permanent establishment (in Hong Kong) operating under a branch exemption regime pursuant to Article 168-ter of the TUIR.
The Italian Tax Authorities have concluded that no hybrid mismatch may arise as the different treatment arises only due to an accounting choice made by permanent establishment in Hong Kong (without a real economic counterparty) which cannot give rise to hybrid mismatches under the above-mentioned regulation.
ITAly issues a decree on notification obligations for Pillar Two purposes
The Ministerial Decree of 25 February 2025 establishes the disclosure obligations of Italian companies that do not submit the Global Information Return or GIR referred to in art. 51 of Legislative Decree 209/2023 for Pillar Two purposes if the obligation is fulfilled by the ultimate parent company, or by a constituent entity appointed for that purpose, located in a Country that has a qualified exchange of information agreement with Italy.
In such cases, the Italian constituent entity shall submit to the Italian Tax Authorities a notification containing a summary of the Group information, the parent company, the designated company, etc. The Italian Tax Authorities will receive the information related to Italian constituent entities party to the Group through the GIR exchange of information procedure with the State of the ultimate parent company, or another constituent entity appointed for that activity.
Italian stamp duties come due even for communication sent to foreign companies
Through the ruling no. 20 of 4 February 2025, the Italian Tax Authorities clarified that stamp duties on financial products is applied to the periodic communications sent to the Italian alternative real estate investment fund by the management company (tax resident in Italy) to a Luxembourg resident company which holds 100% of the units (in turn controlled by an investment fund established in Luxembourg).
In the present case, the financial relationship occurs between:
• the management company resident for tax purposes in Italy; and
• an entity that does not fall within the subject that cannot qualify as a “client” for the purposes of applying stamp duties on financial products.
Clarifications on the documents needed to prove the existence of an intra-community supply
In one of the responses to the videoconference of 5 February 2025, the Italian Tax Authorities clarified which are the documents suitable for proving the shipment or transport of the goods to another EU Member State, in order to carry out an intra-community supply that is not taxable for VAT purposes.
Despite the provisions of art. 45-bis of EU Regulation no. 282/2011, the validity of the previous statements of practice of the Italian Tax Authorities and the set of documents listed therein are confirmed.
In the event that the supply is initially carried out as a VATable transaction (if the evidence of the shipment abroad is deemed not to be satisfactory) or if the taxpayer wants to recover the VAT after the non-taxable supply had been regularized (and the missing documents are only subsequently retrieved), a credit note may be issued.
EU black list revision
At its meeting of 18 February 2025, the Council of the European Union confirmed, without amendments, the list of 11 non-cooperative jurisdictions for tax purposes.
Accordingly, the black-listed Countries are still the same as in the previous version of the list (updated in October 2024), being Anguilla, Russian Federation, Guam, Fiji Islands, US Virgin Islands, Palau, Panama, Samoa, American Samoa, Trinidad and Tobago, Vanuatu.
The OECD issued the consolidated report on Amount B of Pillar One
The OECD Consolidated Report of 24 February 2025 on the so-called Amount B of Pillar One regulates the simplified and standardised approach for the application of the arm’s length principle to distribution and marketing activities.
This is aimed at improving tax certainty and limiting transfer pricing disputes.
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