Italy: Overview of Key Legislative Decrees Under Italy's Tax Delegation Law

1.Draft Legislative Decree on International Taxation

This decree introduces significant changes to the existing framework of international taxation, primarily by adopting the provisions outlined in the Global Minimum Tax Directive (Council Directive [EU] 2022/2523).

It addresses various aspects, including:

(i) Criteria for determining the tax residence of individuals and corporations, undergoing updates in response to international developments and conventions for the avoidance of double taxation.

(ii) Taxation regulations for foreign subsidiaries.

(iii) Current legislation on tax incentives, aligning them with EU guidelines on state aid.

(iv) A revised version of the preferential tax regime for employees or self-employed individuals transferring their tax residence to Italy, commonly known as the "lavoratori impatriati" regime.

2.Draft Legislative Decree on Income Taxes

This decree has broad implications, impacting almost all Payment Service Providers (PSPs) engaged in cross-border payments. It may also affect PSPs not physically based in Italy but providing payment services to payers located in Italy. Additionally, e-commerce platforms facilitating payments between sellers and buyers could be subject to these rules. Businesses should evaluate their role in providing payment services, the types of customers served, and potential reporting obligations for cross-border payments. The specific role played by a business in the payment chain is crucial and requires careful analysis.

3. Draft Legislative Decree on the Rationalization and Simplification of Tax Compliance Rules

This decree aims to promote cooperative and transparent interaction between taxpayers and tax authorities, encouraging spontaneous compliance. Key features include (i) simplification of income tax return, Italian regional business tax (IRAP) return, VAT return, and withholding agent’s return, (ii) restructuring of the Synthetic Tax Reliability Indexes (“ISA”), and (iii) enhancement of digital services for taxpayers.

4. Draft Legislative Decree on the Tax Assessment Procedure

Coordinated with amendments to the Taxpayers' Statute, this decree seeks to boost taxpayer participation in the assessment procedure. Notable provisions include (i) the requirement for the act served on the taxpayer to include an invitation to the compromise procedure to initiate preemptive dialogue with tax authorities, and (ii) the option to accept and settle claims outlined in tax audit reports. The decree also addresses tax evasion and fraud by strengthening cooperation procedures between national and foreign tax authorities and revising rules on VAT representatives. It introduces a two-year preemptive agreement (“concordato preventivo”) for SMEs and self-employed individuals, simplifying reporting obligations and promoting voluntary compliance based on a predetermined amount of taxes.

Reference/ Citation

Il Sole 24 Ore (Italian financial newspaper)