NEWSLETTER N. 10 - 2021

CORRECTION OF STATE AID TABLE IN THE TAX RETURN

The state aid to be shown in the relative tax return's table corresponds to the tax saving or tax credit accrued in the tax period, and not to the deduction or reduction on which such aid is calculated. In case of incorrect compilation, it is possible to submit a supplementary tax return showing the correct amount. Following the filing of the supplementary tax return by the taxpayer, the Italian tax authority will correct the amount entered in the Italian register of state aid (RNA). A fixed penalty of EUR 250 (reduced in case of rectification) shall apply (Italian tax authority, decision no. 26 as of 15 April 2021).

TAX EXEMPTION FOR INTERESTS ON MEDIUM-TERM AND LONG-TERM FINANCING GRANTED TO COMPANIES

The tax exemption scheme for interests on medium-term and long-term financing granted to Italian companies by EU banks pursuant to section 26(5bis) DPR 600/1973 applies to UK banks until the end of the transitional period, i.e. until 31 December 2020 (Italian tax authority, principio di diritto no. 6 as of 9 April 2021).

APPLICATION OF DOUBLE TAXATION AGREEMENT ON INCOME

A VATable Swiss foundation with legal personality being subject to income tax exemption scheme under Swiss law may apply the DTA on income.

The benefits under the DTA also apply in terms of application of withholding tax on Italian source dividends that the foundation receives through an intermediary fund (Italian tax authority, answer to request for advance ruling no. 258 as of 19 April 2021).

CORRECTION OF ACCOUNTING ERRORS

The Italian tax authority has provided clarifications on the fiscal effects of the correction of accounting errors referring to the deduction of goodwill amortisation and on the effects on the base for notional interest deduction (NID) (Italian tax authority, answer to request for advance ruling no. 279 as of 21 April 2021).

REIMBURSEMENT OF EXPENSES INCURRED BY EMPLOYEES WORKING FROM HOME

The sums reimbursed to employees for expenses incurred for working from home (electricity for the use of the computer etc.) are not subject to taxation as long as they are determined on the basis of objective parameters aimed at assessing the expenses saved by the company. In this case, the sums reimbursed may be considered as referring to expenses incurred for consumption purposes in the exclusive interest of the employer (Italian tax authority, answer to request for advance ruling no. 314 as of 30 April 2021).

DEMERGER OF SIMPLE PARTNERSHIP

The demerger of a simple partnership (societá semplice) in favour of another simple partnership does not fall under the tax neutrality scheme provided for by section 173 of Italian Tax Code (TUIR) and does neither qualify as a taxable sale, since the above demerger does not fall within any of the scopes provided for by section 67 of Italian Tax Code (Italian tax authority, answer to request for advance ruling no. 309 as of 30 April 2021).

WITHHOLDING AGENT'S DUTIES NOT REFERRABLE TO A NON-RESIDENT COMPANY

A non-resident company without permanent establishment in Italy does not qualify as withholding agent and is not required to withhold taxes on income paid to its employees in Italy (Italian tax authority, answer to request for advance ruling no. 297 as of 27 April 2021).

TELEWORKING

Income paid to an employee residing abroad and teleworking from abroad is not taxable in Italy (Italian tax authority, answer to request for advance ruling no. 296 as of 27 April 2021).

GUARANTEE PROVIDED IN FAVOUR OF DIRECTOR

The guarantee provided by a company in favour of one of its directors for a bank loan requested by the director for personal reasons is considered as a taxable benefit in kind. For the determination of the employee's taxable amount, reference shall be made to the normal value pursuant to section 9 of Italian Tax Code (Italian tax authority, answer to request for advance ruling no. 294 as of 27 April 2021).

VAT CEILING TRANSFER

If the requirements are met, the habitual exporter status may also be granted to non-residents identified for VAT purposes in Italy. In case of termination of the direct identification and simultaneous appointment of a tax representative by the non-resident, the habitual exporter status and, hence, the VAT ceiling is seamlessly transferred (Italian tax authority, answer to request for advance ruling no. 260 as of 19 April 2021).

SALE OF PROPERTY UNIT WITH KITCHEN

The sale of a property unit with kitchen by a real estate company is subject to the following VAT scheme:

• the purchase of the kitchen by the real estate company is not referable to the goods supplied for the construction of buildings or regeneration works pursuant to no. 24 and no. 127-terdecies respectively of table A attached to DPR 633/1972;
• the sale of the property unit by a real estate company and the sale of the kitchen qualify two separate transactions.

Hence, both the purchase and the sale of the kitchen by the real estate company are subject to standard VAT rate (Italian tax authority, decision no. 25 as of 14 April 2021).

REIMBURSEMENT OF EXPENSES

The reimbursement of expenses incurred under a collaboration agreement between VAT payers for resources involved and business travels carried out when performing the activities under the collaboration agreement are relevant for VAT purposes (Italian tax authority, answer to request for advance ruling no. 226 as of 1 April 2021).

INFRASTRUCTURE WORKS

The 10% VAT rate provided for by section 127-septies of table A attached to DPR 633/1972 applies to the performance of new infrastructure works set forth therein and not to the arrangement, improvement or modification of such works, even if they lead to an enhancement (Italian tax authority, answer to request for advance ruling no. 229 as of 6 April 2021).

MOSS TAX SCHEME

The Italian tax authority has provided clarifications on how to rectify the misapplication of the mini one stop shop tax scheme ("MOOS") (Italian tax authority, answer to request for advance ruling no. 246 as of 14 April 2021).

VAT DEBIT NOTES

The Italian tax authority has provided clarifications on the issuance of debit notes for VAT paid by means of invoice supplement of the non-resident (Italian tax authority, answer to request for advance ruling no. 308 as of 30 April 2021).

MISAPPLICATION OF THE REVERSE CHARGE SCHEME

In case of supplies between two non-residents, the supplier shall invoice the supplies using the Italian VAT ID and shall show VAT on the invoice. In case of misapplication of the reverse charge scheme to the supply, the supplier may rectify said breach by paying a penalty of EUR 250 (reduced due to voluntary rectification) for each incorrect payment and with reference to each customer (Italian tax authority, answer to request for advance ruling no. 301 as of 28 April 2021).

PROPERTY DERIVING FROM FINANCE LEASE AGREEMENT TERMINATED FOR LESSEE'S DEFAULT

The tax benefit set forth under section 35 (10-ter) of Italian Decree-Law 223/2006 provides for the application of registration, mortgage and cadastral taxes at a fixed rate (instead of the proportional one) in case of sale of property deriving from finance lease agreement terminated for lessee's default. The above tax benefit does not apply in case of sale of properties subject to terminated lease agreements which have been received by the seller following the transfer en bloc pursuant to section 58 of Italian banking code (TUB) (Italian tax authority, answer to request for advance ruling no. 303 as of 28 April 2021).

AGRICULTURAL LAND LEASE

The registration tax on agricultural land leases for the construction of wind power plants is applied at the rate of 0.50% if the lease concerns agricultural land, and at the rate of 2% in all other cases (Italian tax authority, answer to request for advance ruling no. 299 as of 27 April 2021).

According to section 7(4-quater) of Italian Decree-Law 357/1994 the following applies to keeping records relevant for tax purposes: “the keeping of accounting records by means of electronic systems on any medium is, in any case, considered regular without transcription on paper media within the terms of the law, if said records, upon access, inspection or assessment, are updated on the aforesaid electronic systems and are printed at the request by the supervisory bodies and in their presence”.

Hence, accounting records kept in machine-readable format or electronically shall be printed upon control and at the request of the examiners only.

However, according to the Italian tax authority, the "keeping" of the records is a separate duty from the "storage" with reference to which the provisions of Italian Ministerial Decree as of 17 June 2014 shall continue to apply.

Hence, electronic records relevant for tax purposes:

1. are not required to be printed until the third (or sixth for 2019 only) month following the deadline for filing the relevant tax return, unless specifically requested by the supervisory body upon access, inspection or assessment;
2. shall be stored by that time (third/sixth month following the deadline for filing the tax return):

• in accordance with the aforementioned Ministerial Decree as of 17 June 2014 and the digital administration code (Italian legislative decree no. 82 as of 7 March 2005) and its implementing provisions, if the taxpayer wishes to keep them electronically or
• in printed form (Italian tax authority, answer to request for advance ruling no. 236 as of 27 April 2021).

Yours sincerely,

HAGER & PARTNERS