da Marco Vergani | Gen 18, 2021 | Impatriate workers, Taxation in Italy
In recent years many foreign individuals are increasingly buying second houses, often prestigious ones, in Italy. The foreign citizen who buys a house in Italy has to deal with the complex Italian administrative and fiscal formalities in addition to having to take care, based on the principle of taxation on a worldwide basis, any further tax and declarative obligations in their own Country of residence.
Basically for non-residents (foreign or Italian citizen who moved abroad) who owns properties in Italy the same legislation as for residents applies. A first distinction must be made between owners who retain possession of the property, for example as a secondary residence, and owners who rent it instead, earning an income. 1. In the first case, no income is taxable in Italy, as the Property Tax (Imu) replaces the personal income tax (Article 8, paragraph 1, Legislative Decree 23/2011) 2. When the non-resident rents the property he own, he produce an income subject to ordinary taxation or the optional flat rate tax regime. Here a particularity of the Italian tax system emerge: the minimal reduction in lump-sum expenses, while abroad the possibility of analytically deducting the costs incurred or significant flat-rate abatements (i.e. for example 50% in France for those who rent furnished apartments). In order to pay taxes with the F24 form a “non-resident” bank account in Italy is needed; alternatively it’s possible to operate bank transfers to specific bank current accounts.
The non-resident also benefits from the non-taxability of the capital gain, if realized later five years from the purchase of the property (Article 67 of the Tuir). If the transfer occurs within five years, it will be possible to exercise the option for the flat tax currently at 26%. This indication is limited to the Italian side: the non-resident must in fact check – in application of the worldwide principle taxation – any further taxation in it’s own Country even if bound by a Convention signed with Italy.
da Marco Vergani | Set 8, 2020 | Taxation in Italy
The stock options must be taxed in the residence country at the vesting period, so if an employee in that period has carried out the job activity in Italy, the tax will take place in this country. This is the content of Agenzia delle Entrate’s reply n. 316 of 7th September 2020.
The taxpayer worked from 2003 to August 2016 in Italy, and then moved to Switzerland from September 2016 to June 30, 2019, enrolling in Aire. In 2010 he received stock options linked to an incentive plan for executives which provided for a vesting period of 3 years, starting from February 26, 2013, fully accrued while working in Italy. The exercise of the options took place on 31 and 19 August 2019. The taxpayer would like to tax income in Switzerland, where he was resident at the time of exercising the stock options.
The Agenzia delle Entrate’s opinion is different. First of all, according to Article 2, paragraph 2-bis, of the Tuir (decree 917/86), Italian citizens who have been canceled from the registries of the resident population and transferred to States or territories with a privileged tax regime (identified with ministerial decree of 4 May 1999) are considered tax-residents in Italy. This is a relative legal presumption which places the burden of proof on the taxpayer and which is also valid in the case of Switzerland, included in the list. With regard to the employment income, to which the fringe benefit is also connected, on the national side, taxation is established by articles 49 and 51 of the Tuir, while article 23, paragraph 1, letter c) establishes that income from employment performed in the territory of the State is considered realized in Italy. It is then necessary to look at the Italy- Switzerland convention. Now the OECD model also includes stock options in employee income (paragraph 2.1), clarifying that we look at the place where the activity is carried out, regardless of the time when the income is paid (paragraph 2.2) and the fact that taxation occurs when the employee no longer works in that State (paragraphs 12.1 and 12.3). In line with the OECD criteria, the connection with the Italian territory exists if in the vesting period (period of maturity of the right) the employee worked in Italy (circular 17 / E / 17 part III paragraph 2.1). Since the employee worked for the Italian office during the entire duration of this period, the corollary is the full taxation of the fringe benefit in Italy.
da Marco Vergani | Set 3, 2020 | Art and taxation, IVA, Taxation in Italy
Original figurative sculptures realized with three-dimensional FDM printers (fused deposition modeling), are not considered “artworks” and therefore the italian 22% VAT rate (instead of 10%) should be applied. This was established by Agenzia delle Entrate in the official answer n. 303 to an artist who, as a sculptor, created objects that he considered works of art; the three-dimensional realization means that the object obtained, with plastic material, has a real shape and can be seen from all sides. Subsequently, the artist painted the work obtained by the printer (some examples can be admired in the science museum of Trento).
The taxpayer requested the application of 10% VAT based on item 127 septiesdecies of table A, part three “art objects sold by the authors and their heirs”.
Agenzia delle Entrate responds negatively, stating that the sale of the goods is subjected to the 22% VAT rate as the reduced rate is applicable for the original works of statutory art or sculptural art, of any material as long as they are carried out entirely by the artist; if they are reproduced, it must be a limited edition of eight copies, controlled by the artist.
So, according to the Agency, the procedure adopted does not correspond to the legislative provisions, taking into account the quantity of objects produced. Furthermore, in this case the works are not made entirely by the artist himself, but are made in whole or in part through the use of mechanical procedures such as the 3D printer – FDM, modeling software, while the artist’s manual intervention is marginal; lacking this contribution, the good obtained is not an “artwork”.
da Marco Vergani | Mag 12, 2020 | Taxation in Italy
Repatriating one or more stages of production carried out across the border by a subsidiary company or by a foreign branch could be necessary due to the emergency linked to the spread of coronavirus.
In the planning of the return to Italy, it must first be remembered that, for tax purposes, the tax period must be considered in a uniform manner. The headquarter transfer does not determine two different tax periods and, consequently, it is necessary to verify whether, in the year of repatriation, the company should be considered resident in Italy or abroad.
According to article 73, of Presidential Decree 917/1986 (Tuir) a person is considered resident for tax purposes when he has at least one of the elements in Italy for most of the tax period that suggest residence (registered office, administrative headquarters, or corporate purpose).
Taking into account that 2020 is a leap year, this condition occurs when the 184 days are exceeded. Simplifying, therefore, if a company transfers its headquarters in Italy by 1 July 2020, it is considered resident in Italy from that year. However, it is necessary to verify how the transfer of the registered office in Italy is treated by the legislation of the foreign state for the different effects that may arise (i.e. time of cancellation of the company from the Register of companies). In the previous example, therefore, the repatriated company will be fiscally resident in Italy in 2020 if the cancellation from the foreign business register takes place by 1 July 2020. If, however, the transfer qualifies as a dissolution hypothesis, the company will assume as the initial date of it’s tax period in Italy, the one of the transfer, regardless of whether it occurs in the first or second part of the year.
The tax valuation criteria of the assets and liabilities belonging to the company moved to Italy are defined by article 166-bis of the Tuir .
The first assessment must be made based on the location of the foreign company.
- If it comes from a state belonging to the EU or white list (Ministerial Decree of 4 September 1996), the incoming tax value of the assets and liabilities is the market value.
- The same criterion also applies in cases of origin from non-EU states or non-white lists in the event of an agreement following rulings based on article 31-ter of Presidential Decree 600/73.
- In the other cases the entry tax value of the assets is assumed to be the lower of the purchase cost, the book value and the market value; for liabilities, however, the higher of the same values must be assumed.
Finally, it should be noted that, if the subject of the transfer is a company or a business unit, the value must be considered taking into account the goodwill.
da Marco Vergani | Apr 29, 2019 | Taxation in Italy, Web Tax
Last budget law (number 148/2018) has anchored the launch of the Italian Web Tax to a very precise timing, linked to the issue (by April 30th, precisely) of a series of measures.
In particular, a decree of the MEF in order to establish «the provisions for implementing the digital services tax “.
At the end of all this, and within 60 days of the Mef / Mise decree, the Italian Web Tax will become operational.
Actually the Mef / Mise decree has not yet been issued.
So, at best, the web tax would have started in the second half of the 2019, now any forecast appears to be risky and the possibility of another false start is far from being remote, as already happened with the rule set forth in previous year’s budget law (205/2017).
The tax on digital services designed last winter in some ways is in line with the work of the European Commission merged into the proposed directive of 21 March 2018. From a subjective point of view, the first condition for the application is identified in the exercise of a business activity.
It is also necessary to overcome, during the calendar year, a double threshold of revenues: the total amount, that is “global” of those realized (not less than 750 million euros) and the total revenues deriving from “digital media services »obtained in the italian territory, which must not be less than 5.5 million euros. The exceeding of the thresholds also takes place at the group level.
At the same time as these two conditions occur, the tax affects both non-resident companies and those resident in Italy, regardless of the nature of the customers, both business-to-business and business-to-consumer revenues.
The Italian web tax, as it was structured, affects all three areas of the digital economy, from e-commerce to multi-sided platforms such as Airbnb, Uber, Foodora, Blablacar, but also activities by Over the top, or the big web portals like Google, Facebook, Twitter, Youtube. In this case, users access the website for free, but in return they give the portals valuable personal information that is the new added value of the digital economy.
da Marco Vergani | Feb 6, 2019 | Taxation in Italy
The Budget Law 2019 amended the regime forfettario previously introduced by the 2015 Stability Law. In particular:
- the threshold of revenues / compensation that allows access to the regime was raised to € 65,000
- the access requirements relating to the cost of personnel and capital goods have been eliminated
- some impediments concerning the performance of work activities and the holding of shareholdings were reformulated.
The regime forfettario makes it possible to apply a single substitute tax on income, with a rate of 15% (5% for the first 5 years of business), replacing those ordinarily provided (Irpef).
From 2020, on the other hand, it will be fully introduced the 20% flat rate for individual and professional entrepreneurs who, in the year prior to the access, have earned revenues or received compensation, adjusted for each year, between 65.001 and 100.000 euros.
Taxpayers who can access the flat-rate scheme can: - start a new business activity, art or profession and that presume to achieve revenues or fees not exceeding 65,000 euros;
- have already started an activity if they have achieved revenues / compensation below the threshold of 65,000 euros.
If several activities are carried out, which are distinguished by different ATECO codes, the sum of the revenues / compensation relating to the various activities carried out must be considered.
Since the flat-rate scheme is a natural regime, taxpayers who are already engaged in business, art or profession access it without the need for any communication.
Subjects can not access the lump-sum scheme: - making use of special schemes for VAT purposes or for flat-rate income-setting schemes;
- non-residents (with the exception of those residing in an EU or EEA State, which ensures an adequate exchange of information, which produce in Italy at least 75% of the total income produced
- that carry out, exclusively or prevalently, operations for the sale of buildings or portions of buildings, building plots or new means of transport;
- who participate simultaneously in partnerships, professional associations or family businesses, or that directly or indirectly control S.r.l. o Associations in participation, which carry out economic activities directly or indirectly related to those carried out by the business activities of the arts or professions;
- physical persons whose activity is mainly carried out in respect of employers with whom work relations are ongoing or during the previous two tax periods, or in relation to persons directly or indirectly attributable to such employers of work.
The lump-sum regime ceases to be effective starting from the year following the one in which the access requirement is terminated, or a cause of exclusion occurs.
For VAT purposes, the adoption of the flat-rate scheme involves a series of simplifications, including the exemption from the obligation of electronic invoicing. The numbering and preservation obligations of the purchase invoices and the customs bills, the certification of the fees and the integration of the invoices for the operations for which tax is payable (with an indication of the rate and relative tax) remain in place.
For accounting purposes, the lump-sum regime exempts from registration and keeping records. Taxpayers who adopt it do not apply sector studies and parameters, do not operate withholding taxes or undergo withholding taxes.
