NEWSLETTER NR. 12 - 2021

CONTRIBUTIONS TO LOSSES

The Italian tax authority has provided additional clarifications on how to benefit from the contributions to losses under the Italian law-decree 41/2021 and other provisions, with special focus on the personal requirements, on eligibility requirements, the calculation of the loss in turnover and the calculation of the contribution (Italian tax authority, newsletter no. 5 dated 14 May 2021).

STATE AID TO BE REPORTED IN THE INCOME TAX RETURN

Agricultural producers that are eligible to submit the 730 income tax return form, may use the 730/2021 income tax return form, but if they benefited from State aid (i.e. contributions to losses pursuant to section 25 of the Italian law-decree 34/2020) must also submit the front page of the REDDITI PF income tax return, jointly with the RS field, in accordance with the terms and the modes set forth for the submission of the said REDDITI PF income tax return form. The State aid table containing data on received contributions only must be fill-out in the RS field (Italian tax authority, resolution no. 5 dated 14 May 2021).

EMPLOYEE WELFARE BENEFITS

Expenses incurred by employees for the purchase of PCs, laptop and tablet computers in order to allow their family members to attend online lessons, and reimbursed by employers, as well as vouchers issued for the same purposes, do not add to income from employment under section 51 (2 f-bis) of the Italian Tax Code (TUIR). However, the employee must provide appropriate supporting documents confirming the organization of distance learning lessons (Italian tax authority, resolution no. 37 dated 27 May 2021).

EXIT TAX E PARTICIPATION EXEMPTION SCHEME

The participation exemption scheme - applicable to equity investments included in business assets - does not apply if business assets, including equity investments, are moved abroad. In such case, the capital gain must be considered jointly for the entire business (Italian tax authority, Principio di diritto n. 10 dated 11 May 2021).

WITHHOLDING TAX

If a partnership holds equity investments in another partnership, the subsidiary undertaking may allocate the taxes withheld to the parent undertaking. The parent undertaking will allocate them to its partners (individuals) (Italian tax authority, answer to request for advance ruling no. 317 dated 10 May 2021).

WITHHOLDING TAX-EXEMPTED DIVIDENDS

As of 1 January 2021, dividends paid by Italian companies to UCITS established in EU or EEA member states that allow for an adequate information exchange:

• and are compliant with directive 2009/65/EC of the European Parliament and the Council of 13 July 2009, i.e., the so-called UCITS IV directive;
• and not compliant with the UCITS directive, but whose operator is subject to forms of prudential supervision in the foreign country, where it is established under the AIFM directive;

are not subject to withholding tax pursuant to section 27 (3) of the Italian DPR 600/1973 (Italian tax authority, answer to request for advance ruling no. 327 dated 11 May 2021).

INCOME FROM EMPLOYMENT

Sums reimbursed on a flat-rate basis, i.e., not based on objective elements and parameters, to employees who work in a smart mode are taxable in accordance with section 51 of the Italian Tax Code (TUIR) (Italian tax authority, answer to request for advance ruling no. 328 dated 11 May 2021).

Sums reimbursed to employees for internet connection expenses incurred that allow full access to all functions offered on the market are also taxable, if they are not based on objective elements and parameters and if the use for corporate purposes is not documented (Italian tax authority, answer to request for advance ruling no. 371 dated 24 May 2021).

SET-OFF

Tax credits resulting from UNICO 2020 (income 2019) not set-off in 2020 because the set-off limit of EUR 1 million was reached, may continue to be set-off in 2021 (specifying 2019 as year of reference on the F24 form) until the date of submission of the yearly tax return 2021 relating to the 2020 tax period. The tax credits offset and relating to the previous business year add to other credits accrued and set-off in 2021 up to the limit of EUR 700,000 (increased to EUR 2 million) for the 2021 calendar year (Italian tax authority, answer to request for advance ruling no. 336 dated 12 May 2021).

CONVERSION INTO AN ITALIAN FIXED-CAPITAL INVESTMENT COMPANY (SICAF)

The standardized conversion scheme under section 171 of the Italian Tax Code (TUIR) applies to the conversion of a joint-stock company into an Italian investment company with fixed capital (SICAF). The "conversion" implies the transition from the company scheme to the exemption scheme of property funds, with a subsequent interruption of the tax period and the realization at normal value of the assets of the "converting" company that are incorporated by the Italian fixed-capital investment company (SICAF). Any contingent capital losses resulting from the difference between the assets' normal value and their non-amortized cost are not deductible under section 101 of the Italian Tax Code (TUIR) (Italian tax authority, answer to request for advance ruling no. 370 dated 24 May 2021).

PURCHASE OF PROPERTY UNITS IN EARTHQUAKE-RESISTANT BUILDINGS ("Sismabonus acquisti")

The tax incentives for the purchase of property units in earthquake-resistant buildings ("Sismabonus acquisti") under section 16(1-septies) of the Italian law-decree no. 63/2013 and the related energy efficiency tax incentives ("superbonus") can be benefited from under the condition that the new units are of a category other than A/1, A/8 and A/9, even if the original property units are category A/2, A/8 and A/9 units (Italian tax authority, answer to request for advance ruling no. 318 dated 10 May 2021).

For the purposes of the tax incentives for the purchase of property units in earthquake-resistant buildings ("sismabonus acquisti") pursuant to section 16(1-septies) of the Italian law-decree 63/2013 and the related energy efficiency tax incentives ("superbonus") it is not required that the construction company carries out itself the earthquake-resistant works, since these works may also be commissioned to a different contracting company. However, the principal company must hold the building authorization required for the works aimed at reducing the seismic hazard and it must be a company that abstractly is eligible to carry out these works. Abstract eligibility can be assessed, by way of examples, through the ATECO business activity code or is confirmed if the construction or restructuring of properties is expressly mentioned in the company's purpose. If the contracting company is not a constructing company, the purchasers of the property units cannot benefit from the "sismabonus acquisti" under section 16(1-septies) of the Italian law-decree 63/2013 and the related "superbonus" (Italian tax authority, answer to request for advance ruling no. 320 of 10 May 2021).

For the purposes of the "sismabonus acquisti" under section 16 (1-septies) of the Italian law-decree no. 63/2013 it is not required to fill-out the section of the sworn report form relating to the appropriateness of the expenses and to prepare a cost calculation. In this case, the tax deduction is granted based on the purchase price and, hence, not on the cost of works (Italian tax authority, answer to request for advance ruling no. 366 dated 24 May 2021).

For the purposes of the "sismabonus acquisti“ under section 16 (1-septies) of the Italian law-decree no. 63/2013, the deduction must be calculated up to the maximum threshold of EUR 96,000 on the purchase price resulting from the sale and purchase deed. The maximum threshold refers to the price of the main property and appurtenances jointly, even if they are registered separately in the land registry (Italian tax authority, answer to request for advance ruling no. 366 dated 24 May 2021).

For the purposes of the "sismabonus acquisti“ under to section 16 (1-septies) of the Italian law-decree no. 63/2013, the authorization procedures must be started after 1 January 2017 (Italian tax authority, answer to request for advance ruling no. 365 dated 24 May 2021).

TAX CREDIT FOR ENERGY-EFFICIENCY AND FOR THE PURCHASE OF EARTHQUAKE-RESISTANT PROPERTIES ("ECOBONUS" AND "SISMABONUS")

For the purposes of the tax incentives for energy-efficiency and seismic hazard improvements respectively under section 14 and section 16 of the Italian law-decree no. 63/2013 it is required that the title authorizing the works confirms that the works are aimed at the regeneration of existing properties under section 3(1d) of the Italian DPR no. 380/2001, and not at a new construction pursuant to section 3 (1e) of the Italian DPR no. 380/2001 (Italian tax authority, answer to request for advance ruling no. 364 dated 24 May 2021).

BENEFICIARIES OF CONSTRUCTION TAX BENEFITS

Investment and property UCITS are not eligible for the energy-efficiency and the seismic hazard improvements tax benefits ("ecobonus" and "sismabonus"), since they are not subject to income taxes, even though they qualify as corporate taxpayers (Italian tax authority, answer to request for advance ruling no. 372 dated 25 May 2021).

TAX CREDIT SALE

Sales of tax credits ("ecobonus" and "sismabonus") are VAT-exempt under section 10 (no.1) of the Italian DPR no. 633/1973, if made against financial consideration and consideration for financial purposes. Hence:

• an invoice is not mandatory, unless requested by the customer, pursuant to section 22 (6) of the Italian DPR no. 633/1972;
• a receipt or a tax receipt is not mandatory pursuant to section 2 (1n) of the Italian DPR no. 696/1966 (Italian tax authority, answer to request for advance ruling no. 369 dated 24 May 2021).

REFUND

The appointment of a fiscal representative does not preclude a non-resident taxpayer from his or her right to request a VAT refund through the electronic portal under section 38-bis2 of the Italian DPR no. 633/1972, if there are no obstacles relating thereto (i.e., sales that lead to a VAT debt). However, the purchase invoice for which a VAT refund is claimed through the "electronic portal":

• must show the VAT number of the non-resident taxpayer (hence, it is not allowed to use the portal in order to claim VAT refunds on inbound invoices showing an Italian VAT number);
• do not add to the periodic VAT settlements and to the annual VAT tax return submitted by the fiscal representative (Italian tax authority, answer to request for advance ruling no. 359 dated 20 May 2021).

EDUCATION SERVICES PROVIDED BY FOREIGN CERTIFICATION BODIES

Services on the certification of English language skills provided by a UK certification body to an Italian education body are subject to VAT under the reverse charge scheme, and do not benefit from the exemption scheme under section 10 of the Italian DPR no. 633/1972 (Italian tax authority, answer to request for advance ruling no. 6 dated 18 May 2021).

PROPERTY LEASE PAYMENTS

Taxpayers determining the taxable base for IRAP purposes pursuant to section 5 of the Italian legislative decree no. 446/1997 may deduct the property lease payments, as recorded in the profit and loss account. Hence, without "unbundling" the share relating to the cost of land. Hence, for regional tax on productive activities (IRAP) purposes the provisions under section 36 (7) and section 36 (7-bis) of the Italian law-decree no. 223/2006 do not apply (Italian Supreme Court ruling no. 7138 dated 13 April 2021).

TOBIN TAX ON CONTRIBUTIONS THROUGH EXCHANGE

The financial transaction tax applies to the contribution of equity investments held in a joint-stock company pursuant to section 177 (2-bis) of the Italian Tax Code (TUIR), whenever the transferee company acquires a 25 percent equity holding and not the majority of voting rights. Indeed, in such case, the Tobin tax exclusion as provided for under article 4.b of directive 2008/7/EC for restructuring transactions does not apply (Italian tax authority, answer to request for advance ruling no. 377 dated 17 May 2021).

REGISTRATION, MORTGAGE AND LAND REGISTRY FEES

The registration, mortgage and land registry fees apply at a fixed amount in the event of purchase of entire buildings by construction/property restructuring companies that provide for the demolition and restructuring and the subsequent sale of the properties pursuant to section 7 of the Italian law-decree no. 34/2019. To this purpose, the contribution is equalized to the sale of properties, even if made in favour of a property fund (Italian tax authority, answer to request for advance ruling no. 376 dated 27 May 2021).

Yours sincerely,

HAGER & PARTNERS