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Tax Pills

  • Italy, new Vat rules from 2022

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    Changes in sight for the Italian Vat rules with the arrival of the New Year. Indeed, as of 2022, new Italian value-added tax procedures and records will apply regarding both electronic invoicing for cross-border transactions and pre-populated Vat ledgers and returns.

    E-invoicing looks across the borders - Particularly, from 1st July 2022, the e-invoicing rules will be extended also to the following cross-border transactions carried out by entities established in Italy with non-Italian customers/suppliers: intra-EU acquisition of goods; intra-EU supplies of goods; imports, if the related customs bills are not available; exports, if the related custom bills are not available; domestic acquisitions of goods from entities non established in Italy, subject to reverse charge; domestic sales of goods to entities not established in Italy; services rendered to entities not established in Italy and services purchased form entities not established in Italy. Under the new rules, Italian entities will have to report details of the above-mentioned transactions to the Italian Revenue Agency using the same rules and processes in place for mandatory e-invoicing between Italian parties.

    About the pre-populated Vat returns - Starting from 2022, the Italian Revenue Agency will make available also the draft annual Vat return, from the 10th of February of the year following the one of reference. Until the end of Fiscal Year 2022, these draft documents will be prepared by the tax authorities only for taxpayers who perform by option the Vat calculation on a quarterly basis. Moreover, some taxable persons are excluded from this simplification, for example, those using special VAT regimes, VAT groups, Public Administration, some retailers, and health service providers. As for the pre-populated personal income tax returns, even in this case taxpayers involved will be able to validate or add information to the draft Vat returns.

    Stefano Latini

    URL: https://fiscooggi.it/tax-pills/articolo/italy-new-vat-rules-from-2022
  • EU-Anti-Tax Avoidance Directive, ATAD, and Foreign Subsidiaries (Cfc), available from today the Decision of the Director of the Revenue Agency and the Circular letter with clarifications

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    The full text of the Circular n. 18/E, which illustrates the new rules relating to Controlled Foreign Companies (Cfc) in accordance to the implementation of EU-ATAD regulation, and the Decision of the Director of the Agency setting the new criteria for determining in a simplified manner the requirement of the effective level of taxation indicated in Article 167, paragraph 4, letter a of the Tuir (effective taxation of the profit lower than 50 per cent of the Italian one), are now available on the Revenue Agency official web site, www.agenziaentrate.gov.it, in the two sections reserved to Decisions and Circular letters on line publication.
    Both documents were integrated following the numerous contributions and proposals received during the public consultation launched last July 2021.

    The purpose of ATAD - The Controlled foreign company rule (Articles 7 and 8 of the ATAD) attributes the income of a low-taxed controlled subsidiary or a permanent establishment (“PE”) to its parent company or head office. The parent company or head office becomes taxable on this attributed income in the State where it is resident if the actual corporate tax paid by the controlled entity/PE on its income is lower than the difference between the corporate tax that would have been paid on the same profits in the Member State of the domestic taxpayer/parent company and the actual corporate tax paid by the entity/PE in the source state. Thereby, the CFC rules in the ATAD aim to discourage multinational companies from shifting profits from their parent company in high tax country in subsidiaries in low or no tax countries to reduce the group’s tax liability.

    The contents of the Circular - The Circular provides definitive clarifications on the Cfc regulations currently in force following the changes introduced by Legislative Decree no.142/2018 or ATAD Decree. Particularly, the document focuses on the subjective and objective requirements for its application, on the methods of determining the (effective) foreign tax level for the purpose of comparison with the (virtual) Italian one. In addition, the Circular provides information on the safe harbor rules which allow to not apply the Cfc discipline, on the determination and taxation of the income of the controlled entity, as well as on the discipline related to extraordinary transactions.

    The Director Decision - The discipline introduced by the ATAD Decree provides for the identification of new criteria to verify, with simplified procedures, the correctness of the actual foreign taxation compared to the virtual domestic one, to be carried out through a Decision of the Director of the Revenue Agency. Therefore, today’s Decision takes into account the changes brought to the Cfc regulations and updates the indications contained in the previous Act, which is thus replaced.

    The two documents in detail - In particular, with the Circular letter published today, the new definitions needed to apply the regulations have been fully clarified. At the same time, are listed the foreign taxes to be considered for the purpose of determining the effective foreign taxation and the Italian taxes to be considered for the purposes of virtual internal taxation. Other changes contained in the Decision include the drawing of the criteria for determining effective foreign taxation and internal virtual taxation.

    Stefano Latini

    URL: https://fiscooggi.it/tax-pills/articolo/eu-anti-tax-avoidance-directive-atad-and-foreign-subsidiaries-cfc-available-from