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Italy approved new financial package

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The Italian Government has very recently approved the financial package necessary to face the current economic crisis containing new fiscal measures for strengthen the fight against tax evasion.

Tax measures regard first of all the increase in the value-added tax (VAT) rate of 1 percent, only for goods and services that were affected by 20 percent rate, and the introduction of a 'solidarity tax' on incomes of 3 percent applied on all personal incomes over EUR 300'000.

Moreover, it has been approved the rise of tax rate on financial income (dividends) from 12.5 percent to 20 percent (this would not affect Trusts with Italian assets), and the increase from 6.5 percent to 10.5 percent, of supplementary tax on energy companies with revenue over EUR 10 million.

Also new measures against tax evasion have been enacted:

  • Jail for larger tax dodgers: stricter sentences for taxpayers, for example, in case of false tax returns or submitting false tax documents. Moreover, tax dodgers will be punished with jail if they will evade over EUR 3 million and in case the evaded amount is above 30 percent of the volume of business.
  • Increase of the corporate tax rate on shell companies: shell companies, usually established to hold assets (such as real estate properties, yachts and luxury cars) in order to take advantage of company taxation instead of personal one, should pay more; in fact the corporate tax rate applicable on minimum income of shell companies will rise from 27.5 percent to 38 percent. It will not be possible to avoid this higher taxation neither including the shell company in a tax consolidation nor applying the regime of fiscal transparency.

Another aspect of this new norm regards in particular the use of companies' goods by partners and/or entrepreneur's relatives. In fact companies cannot deduct related costs if the annual payment for the use of those goods (for example, rental rates) is lower than market prices.

Another measure of the package provides that business operators with a business volume until EUR 5 million, that chose to pay suppliers and to be paid by credit card and/or other traceable means of payments, will have reduced by half the penalties in case of missed tax receipts and missed or false tax returns and VAT documents.

Under the new regulations, the Italian Revenue Agency could also redact specific lists of taxpayers based on bank accounts.

Moreover, town councils will be more involved in the fight against tax evasion thanks to more powers and incentives: they will earn 100 percent of the evaded amount discovered and they can publish online taxpayers revenue details.

Mauro Mattei, Partner at LombardDCA, Milan, Italy

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