PATENT BOX AND FOREIGN TAX CREDIT
To determine the foreign tax credit, taxpayers that benefit from the patent box incentives must consider in any case the foreign income, including the expenses incurred for its generation (Italian tax authority, Principio di diritto n. 15 of 5 November 2021).
For income purposes the sale of cryptocurrencies is deemed a sale of foreign exchange pursuant to section 67 (1-ter) of the Italian Tax Code (TUIR). Hence, it is relevant only if the average amount of cryptocurrencies available in all wallets held by the taxpayer exceeded the counter-value of EUR 51,645,69 for at least seven consecutive working days during a tax period. The exchange ratio between the virtual currency and the Euro at the beginning of the tax period (1st January) recorded on the platform, on which the virtual currency was purchased, must be used for verification purposes. Cryptocurrencies are subject to fiscal monitoring duties and must, therefore, be stated on the RW field of the Italian income tax return (code 14): These duties apply to cryptocurrencies held anywhere (foreign exchange, wallet hardware desktop, even if with direct availability of private keys) and, hence, even if not held abroad (Italian tax authority, answer to request for advance ruling 788 of 24 November 2021).
A clause on the prohibition to unilaterally modify the lease payment contained in a lease agreement is unsuitable to justify the non-application of the dormant companies’ scheme under section 30 of the Italian law 724/1994, if the lease agreement is entered into by and between related parties (Italian Supreme Court ruling 34232 of 15 November 2021).
RECOVERY OF STATUTORY AND FISCAL MISALIGNMENT
The statutory and fiscal misalignment deriving from the differences in statutory and fiscal depreciation over time must be recovered in the first tax period with sufficient tax liabilities for an additional tax depreciation rate to be set off against them (up to the maximum amount set forth based on the depreciation ratios contained in the ministerial decree dated 31 December 1988) (Italian tax authority, answer to request for advance ruling 761 of 3 November 2021).
CUMULATION OF TAX INCENTIVES FOR PROPERTY IMPROVEMENTS
Income tax deduction for property renovation measures pursuant to section 16-bis (3) of the Italian Tax Code (TUIR) is granted even in the event in which the seller (company that renovated the entire building to which the property unit to be sold belongs to) benefits from corporation tax deductions for energy efficiency measures pursuant to section 14 of the Italian law-decree 63/2013 made on the same property. Indeed, the cumulation of both tax deductions does not give rise to an undue tax advantage being obtained (Italian tax authority, answer to request for advance ruling 769 of 10 November 2021).
ANTI-FRAUD DECREE: SWORN STATEMENT AND COMPLIANCE CERTIFICATION
The Italian tax authority provided clarifications on the measures contained in the so-called anti-fraud decree (Italian law-decree 157/2021) to combat fraud related to property improvement tax incentives, effective as of 12 November 2021.
As to the 110 percent super bonus, it was clarified that the duty to obtain compliance certification required to be allowed to benefit from tax deduction at the time of filing the income tax return applies only to invoices issued and the relevant payments made as of 12 November 2021. Hence, no compliance certification is required for expenses incurred before 12 November 2021 and specified in the income tax return, even if filed and/or amended after 11 November 2021.
As to accrual basis taxpayers, the duty to include compliance certification applies to invoices issued as of 12 November 2021 only, irrespective of the period to which the expenses are allocated.
As to how the sworn statements for works falling within the scope of the 110 percent super bonus must be issued, it is set forth that in order to determine whether expenses are appropriate reference must be made not only to the price lists specified in the decree released on 6 August 2020 by the Italian ministry of economic development (MISE) on the "Technical requirements for access to tax deductions for energy efficiency works on buildings - so-called ecobonus", but also to the maximum amounts set forth for certain asset categories by a decree still to be released by the Italian ministry for ecological transition.
While awaiting the adoption of the above-mentioned decree, it was clarified that in order to confirm the appropriateness of the expenses relating to:
- energy efficiency measures reference must be made to the decree released by MISE on 6 August 2020;
- works other than those aimed at energy efficiency, including those aimed at reducing the seismic hazard, falling under the scope of the 110 percent super bonus, reference must be made to the prices contained in the price lists prepared by the regions and autonomous provinces, official price lists or price lists released by the local Chambers of Commerce or, in the absence thereof, to market prices set forth for the place in which the works are carried out.
As to the property improvement tax incentives other than the 110 percent super bonus, the duty to include compliance certification and a sworn statement on the appropriateness of expenses to be able to exercise the option for tax credit transfer or invoice discount applies to notices filed as of 12 November 2021.
There is no duty to include compliance documentation and a sworn statement on the expenses incurred in the event in which, for invoice already issued, taxpayers already provided for the relevant payments and exercised the option for tax credit transfer through the execution of agreements between the transferor and the transferee or for invoice discount through the relevant registration before 12 November 2021, albeit not having provided for submission of the notices to the Italian tax authority yet.
The compliance documentation and the sworn statement are issued according to the same modes as for the 110 percent super bonus, yet with the peculiarity that the new sworn statement on the appropriateness of amounts and compliance with maximum costs eligible according to the type of work carried out, if any, may be issued:
- even on plain paper, if there is no sworn statement form provided for by law, as long as it is specified that the taxpayer is aware of his or her criminal liability in the event of untrue representations and the use of false deeds as well as of the loss of the tax incentives obtained based upon untrue representations under section 75 and section 76 of the Italian DPR 445/2000;
- even in the absence of progress of works or completion of works, provided that the works have been at least started.
No sworn statement on the appropriateness of the expenses related to the so-called "tax deduction for purchases of earthquake-resistant properties", since this tax deduction is commensurate to the expenses incurred upon the purchase of the property and not to the expenses incurred to carry out the construction works (Italian tax authority, newsletter 16/E of 29 November 2021).
SUPER BONUS – CRITERIA FOR THE ACHIEVMENT OF 60 PERCENT COMPLETION
To verify the prerequisite of at least 60 percent of works being completed on 30 June 2022 - requirement to benefit from the extension by another 6 months of the 110 percent super bonus - reference must be made to the measure as a whole.
Hence, if refurbishment and plant installation works, not falling within the scope of the property improvement tax benefits and works on structural improvements (for which the tax deduction for earthquake-resistant properties applies) are carried out concomitantly, the achievement of the completion percentage must be verified with regard to the measure as a whole and not just with regard to works aimed at reducing the seismic hazard eligible for tax deductions (Italian tax authority, answer to request for advance ruling 719 of 24 November 2021).
SUPER BONUS – NOTICES ON THE TRANSFER OF TAX CREDIT OR INVOICE DISCOUNT FOR MULTIPLE MEASURES
If earthquake protection and energy efficiency measures (to replace winter air conditioning plants as well as windows and doors) are carried out concomitantly on the same building and for which the option for tax credit transfer or invoice discount is exercised, three separate forms must be filled out to report the option, i. e. a separate form for each measure completed (Italian tax authority, answer to request for advance ruling 784 of 18 November 2021).
SUPER BONUS – THERMAL INSULATION
To verify the achievement of 25 percent of the gross total dispersing surface requested to benefit from the super bonus in relation to measures on thermal insulation, the unheated building surface must not be considered, since the legal provision refers to horizontal, vertical, and inclined opaque surfaces that mark the buildings' heated volume (Italian tax authority, answer to request for advance ruling 779 of 16 November 2021).
TAX DEDUCTION FOR SEISMIC HAZARD IMPROVEMENTS - PURCHASES
Even works for which the building permit was issued after 1 January 2017 - irrespective of the starting date of the authorization procedure - are eligible for the "tax deduction for seismic hazard improvements - purchases" for expenses incurred as of 1 January 2021 only.
The "tax deduction for seismic hazard improvements - purchases" can be benefited from even in the event in which a property on which works aimed at improving the seismic hazard are carried out is located in a municipality that is reclassified from seismic hazard zone 4 (non-eligible) to seismic hazard zone 3 (eligible), provided that the works have not been completed yet on the date on which the resolution on the change of the seismic hazard zone is adopted. In such an event, the prior sworn statement required to benefit from the tax incentive may be filed by the company no later than on the date of the notarial deed of purchase and sale (Italian tax authority, answers to requests for advance ruling 770, 772, 773 and 775 of 10 November 2021).
DIRECT TAX DEDUCTION FOR SEISMIC HAZARD IMPROVEMENTS
The tax deduction for seismic hazard improvements (even as a 110 per cent tax deduction) relating to works in progress on buildings that are reclassified from a seismic hazard zone 4 (not eligible) to seismic hazard zone 3 (eligible) is granted for expenses incurred as of the date on which the change of the seismic hazard zone takes effect, even if no prior sworn statement on seismic hazard improvements has been filed, as long as the sworn statement is filed by:
- the deadline for the filing of the income tax return, which includes the first tax deduction instalment, in case of direct tax deduction on the income tax return;
- before the filing of the notice on the exercise of the tax credit transfer or invoice discount option pursuant to section 121 of the Italian law-decree 34/2020 (Italian tax authority, answer to request for advance ruling 764 of 8 November 2021).
As to income taxes, the position held by an employee of a corporation is not compliant with the office of the Chairman of the Board of directors or the office of sole director of such corporation since the powers of representation, direction, control and the disciplinary powers of the corporation being dependent upon the one and the same individual do not reflect the diversity of the parties required for an employment relationship and the relevant separate duties that are required for the essential and unfailing element of subordination. Therefore, the cost of employment is not deductible from the corporation's income. For the relevant cost to be deductible from corporate income, compliance of the office of a shareholder-director as a member of the Board of Directors of a corporation with the role of employee of the same corporation must not be verified under formal aspects only (with regard to the articles of association and the resolutions adopted by the corporation), but whenever required it must be ascertained whether there is actually a relationship of employer and employee, an authority of direction and disciplinary powers and, more specifically, whether duties other than those required by the corporate office held are carried out (Italian Supreme Court, ruling 36362 of 23 November 2021).