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Latest Changes in the Italian Tax Administration

Gilberto Gelosa, founding partner of Interconsulting, Treasurer and Secretary of Pragma and responsible of the tax area of the Consiglio Nazionale dei Dottori Commercialisti, which is the main public organization in Italy of Commercialisti, intervened with two speeches at the event "Changes in the Italian tax administration" organized by the Finance and Economy Ministry of Italy.

Gilberto Gelosa speeches were about the new institutes introduced in Italian tax laws providing preemption tax ruling between big companies and Italian tax administration with the aim to reach preemption and definition for some years of tax agreement on the basis of business plans for domestic and foreign investments in Italy.

The main item focuses on the above new proceedings that may be transfer price, permanent establishments, transfer of registered office and tax treaties about dividend, interests, royalties and patent box. The first ten agreements of the new Italian tax administration were signed after the new law entered in force with about 4 billion € of investments and involving 76.000 workers.

The so called cooperative compliance agreement, which one of the main sponsors is OECD, will grant the complete security on the tax amount to be paid for the agreed period by the Tax Administration. The event and the introduction of the round table was attended by the Minister of Economy Giancarlo Padoan, the Vice-Minister deputy to tax Luigi Casero, the general manager of Italian Tax Administration Rosella Orlandi, the chief of Italian Tax Police Gen. Giorgio Toschi et al. Each specific further round table such as the above regarding cooperative compliance was ruled by tax professors, managers of tax administration and responsible of big enterprises like Ferrero.

The cooperative compliance, for the intention of the participants to the meeting, becomes everyday more solid and real. Today, the cooperative compliance is still something reserved to a few industrial groups of relevant dimension. However, in a foreseeable future it will encounter an increasing number of subjects and entities ready to sign a prior and steady agreement with the Revenue. The new threshold of 50 millions Euros turnover can open new possibilities to a higher number of enterprises willing to invest in Italy and that can enjoy a juridical and fiscal environment favorable to the planning and development of own investments. Enterprises and companies of the third millennium are in great need to find certainty and stability to plan their own development and consolidating policies in reasonable and favorable conditions.  Uncertainty and unclear relationships with Economic Agents and the Administration are often the reasons of a state’s slow growth. Enterprises normally prefer countries with low taxes; nonetheless they prefer to develop their own activities in a stable and lasting context where tax-planning activities could be really possible and efficient.

During his speech, Gilberto Gelosa focused particularly on the following items:

  • On the necessity to expand the application of the existing rules also to medium sized and small enterprises;
  • On the necessity to set up policies for internal audit and control to enjoy in the full measure of the tax benefits;
  • On the facilities granted by the rules in force to give tax premium to enterprises entitled to the cooperative compliance and to have the possibility to have granted in advance the knowledge of the amount of the tax cost of their investments.

During the second round table, entitled “New Tax Facilities for Investments in Italy”, at which Gilberto Gelosa participated together with others professionals, it was discussed that the Italian tax law allows the deduction (140%/250%) of particular asset purchase costs, the possibility to reduce tax payments on intangibles according to patent box rules, and the reduction of taxable amounts when equity of the companies is increased. All the rules are subject to the aim of facilitating the taxation for the business development and to attract or re-attract investments in Italy.

In a world where the tax global competition is a daily matter, the new Italian rules guarantee not only the competitiveness with other countries, but assure also big domestic and foreign enterprises to do investments in Italy with a reduction of tax payments and the digital transformation and development of the industry.

The Italian government, in order to sustain and to promote a new “industrial revolution, mostly in the manufacturing sector, decided to give a boost to incentive tools already existing in the system that during the last years demonstrated to guarantee an effective distribution of Italian enterprises throughout all the territory bringing a competitive and efficient improvements favouring innovation in products and processes.

Such actions, entered into force with the Law 11/12/2016 n232 (Law on Public Finance 2017), can be summarized listing five key pillars:

  • Super-depreciation and Hyper-depreciation

This manoeuvre lets the enterprises to potentiate their fiscal benefits, which is normally correlated to depreciation deductions on sustained costs to purchase goods for productive activities. This operates through the application of a specific multiplier of the cost of the business combination. This tax advantage, only foreseen for 2017 investments on new instrumental goods (tangible and intangible assets) with the aim to guarantee technological innovation and transformation in production processes, materializes in an increment – solely for fiscal purposes – of the cost sustained by an enterprise, respectively:

  1. + 40% for tangible and intangible assets’ investments listed in the enclosure B of the above-mentioned law on public finance.
  2. + 150% for tangible and intangible assets’ investments with a higher innovative and technological content listed in the enclosure A of the above-mentioned law on public finance.
  • Tax Credit for Research and Development

This benefit is about a tax credit acknowledged to those enterprises, which make an investment on research and development. The amount of such credit shall be calculated as the 50% of the increment of the investments for such aims compared to the average sustained by the beneficiary enterprise during the past triennium (maximum credit of Euros 20.000.00).Admitted to benefits are all the expenses related to essential research, industrial research and basic development. The benefits can be cumulated with other benefits therein specified;

  • Fiscal Benefits for Start-ups and innovative SMEs

Benefits are here alternatively considered as IRPEF (Personal Income Tax – PTI) or IRES (Tax on Company Revenue) tax deductions (equal to the 30% of the amount spent) for those who invest for at least a three years period for venture capital of start-ups in line with innovative requirements provided in the law. Even more, there is the possibility to extend deductions (for the first four years) on losses incurred by innovative Start-ups from listed sponsor-enterprises that have decided to invest in their capital;

  • Nuova Sabatini

This is about a historic and consolidated facilitation, which consents to enterprises to have access to a concessional financing for purchasing new productive machineries, installations and equipment. This financing is given with a contribution to cover payable interests to be granted in view of funding provided by banks and by other financial intermediaries to support investments (equal to the rate of 2,75% raised to 30% in the case of technology investment;

  • Patent Box

This is a new tax advantage finalized to encourage the development or the repatriation of enterprises that deal with innovation. To summarise, the method of calculating consists in an elaborated calculation to determine a share in the earning, which is exempt from taxation, proportionally established to the costs sustained in R&S in order to maintain/develop the intangibles and the total costs sustained for the realisation thereof.

Interconsulting and Pragma together with Gilberto Gelosa, who has the specific skills and the institutional relationships, could be efficient partners for the evaluation of specific projects of foreign companies investing in Italy but also to support similar tax proceedings in other countries worldwide.

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Gilberto Gelosa founded the firm in 1988, bringing the corporate brand Interconsulting to life. In the years since,

Gelosa made valid partnerships and together with his partners, associates, Italian and foreign colleagues, created an international network.

His specializations and areas of expertise are company, commercial and tax law and he coordinates all activities of the firm. Moreover, he supports institutions and contributes to the development of academic research.