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).
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).
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).