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Cooperative Compliance Regime

July 15, 2024

Legislative decree no. 128/2015 signed into legislation the Cooperative Compliance Regime with the aim of promoting stronger forms of communication and cooperation between the Italian Tax Authorities and taxpayers whose framework includes systems for detection, measurement, management and control of tax risks and exposure.

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Amendments to the Cooperative Compliance Regime

Legislative decree no. 128/2015 signed into legislation the Cooperative Compliance Regime with the aim of promoting stronger forms of communication and cooperation between the Italian Tax Authorities and taxpayers whose framework includes systems for detection, measurement, management and control of tax risks and exposure.

The Biennial Preventive Agreement (BPA)

Legislative Decree no. 13 from 12 February 2024, with the aim of reinforcing cooperative compliance institutions, has established the Biennial Preventive Agreement (BPA) through which, upon the reaching of an agreement between the Italian Tax Agency and an individual tax payer, the latter shall be able to determine, for a two-year period, the income which derives from the exercise of its business or from that of trade and business-related to income tax and IRAP (regional tax on productive activities) purposes. The new institution does not, however, impact current VAT regulations.

Cooperative Compliance Regime

Legislative decree no. 128/2015 signed into legislation the Cooperative Compliance Regime with the aim of promoting stronger forms of communication and cooperation between the Italian Tax Authorities and taxpayers whose framework includes systems for detection, measurement, management and control of tax risks and exposure.

Penalty system reform – Council of Ministers, 24 May 2024 – News related to Voluntary Correction of Errors procedure and Cumulative Judgment

The Council of Ministers’ meeting on 24 May 2024 definitively approved the text of the implementing decree of tax delegation containing penalty system reform.

Judgement No. 2403/17/2024 of the Tax Court of Second Instance of Lazio – immediate implementation of the judgment of the European Court of Justice in Case C-341/22

The Tax Court of Second Instance of Lazio in Judgment No. 2403/17/2024, immediately applying the findings of the European Court of Justice in Case C-341/22 of March 7, recognized the right to a VAT refund of a company with a systematic loss, disapplying art. 30 of Law No. 724/1994.

The demerger by demerger split as a worthwhile alternative to the transformation of a permanent business establishment in Italy into a subsidiary

As already discussed in a previous article (ed. March 5, 2024), with the introduction of Article 2506.1 into the Civil Code, a new form of partial corporate split-up known as demerger by demerger split has been included in our legal system, through which the demerged company assigns part of its assets to one or more newly established companies (or even for the benefit of pre-existing companies, as provided by Bill No. 209 of November 7, 2023 of the Milan Notary Council) receiving in exchange shares or quotas of said company.

New tax credit for investments upon implementation of the transition 5.0 plan

Art. 38 of the PNRR Decree (Decree-Law 19/2024) introduced the new 5.0 tax credit for investments made in 2024 and 2025 in assets allowing for energy savings beyond certain percentage limits, to be recognised to an increasing extent according to the level of consumption reduction achieved.

Demerger by demerger split – similarities and differences to traditional demergers and contribution in kind

Article 51 of Legislative Decree No. 19/2023 added Article 2506.1 to the Italian Civil Code, which introduced a new version of the demerger into the Italian legal system, called demerger by demerger split, through which the demerged company assigns part of its assets to one or more newly incorporated companies (or also to existing companies, as provided for by the Milan Notary Council's Maximum No. 209 of 7 November 2023) receiving shares or quotas of the same, continuing its business.

The Tax Authority censures, for ethical purposes, outgoing shareholder reinvestment of in the context of an MLBO transaction

In response to advance tax ruling no. 22/2024, the Tax Authority confirms the previous position taken with legal principle no. 1 of 2019, whereby it deemed that the reinvestment made by the outgoing shareholders, in the absence of offsetting by the credit accrued from the transfer of the shareholdings, constitutes an undue use of the ACE benefit censurable pursuant to Article 10-bis of Law no. 212/2000, given (i) the circularity of the transaction i.e. its inability to produce appreciable economic effects beyond obtaining an undue tax advantage and (ii) the failure of the outgoing shareholders to introduce new financial resources into the company, but the mere circularity of the cash flow.

No incompatibility between EU Directive 2022/2523 on Global Minimum Tax and the EU principle of freedom of establishment

With the publication in the Official Gazette of Legislative Decree No. 209 of 27 December 2023, Italy formally implemented the provisions set forth in EU Directive 2022/2523, aimed at reducing situations of tax base erosion and profit shifting to States or territories with a favourable tax regime, through the provision of a global minimum tax (so-called Global Minimum Tax) to be applied to multinational or domestic groups with annual revenues, as resulting from the consolidated financial statements of the parent company, no lower than EUR 750 million in two of the four financial years preceding the current one.
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Amendments to the Cooperative Compliance Regime

The Biennial Preventive Agreement (BPA)

Cooperative Compliance Regime

Penalty system reform – Council of Ministers, 24 May 2024 – News related to Voluntary Correction of Errors procedure and Cumulative Judgment

Judgement No. 2403/17/2024 of the Tax Court of Second Instance of Lazio – immediate implementation of the judgment of the European Court of Justice in Case C-341/22

The demerger by demerger split as a worthwhile alternative to the transformation of a permanent business establishment in Italy into a subsidiary