Foreign subsidiaries: news on the subject of investments in Italy

Review of the international and supranational aspects of the tax system

Among the innovations contained in the delegation to the Italian government for the tax reform (Law 111/2023) we find the art. 3 which deals with the general principles relating to EU and international tax law. In detail, in exercising the delegation, the Government is required to:

• adapt the principles of the national tax system to the levels of protection of rights established by EU law;
• ensure the consistency of the internal legal system with the OECD recommendations in the context of the BEPS project, in order to counter the erosion of the tax base;
• ensure the revision of the regulation of the tax residence of natural persons, companies and entities other than companies as a criterion of personal connection to taxation;
• promote the introduction of measures aimed at bringing the income tax system into line with greater international competitiveness, including through the granting of incentives for investment or the transfer of capital in Italy for the promotion of economic activities in the area Italian.

Following the changes made during the conversion phase, it was specified that, with reference to tax residence, the possibility of adapting the discipline to the execution of the work performance in agile mode will have to be assessed.

Furthermore, it is planned to transpose the Council Directive (EU) 2022/2523 of 14 December 2022, concerning the definition of a global minimum level of taxation for multinational groups of companies and large-scale national groups in the EU .

Space then for the simplification and rationalization of the so-called regime. controlled foreign companies (CFC - Controlled Foreign Companies), reviewing the criteria for determining the taxable amount subject to taxation in Italy.

Incentives for investments or capital transfers in Italy

Letter d) of the art. 3 delegates the Government to promote the introduction of measures aimed at bringing the income tax system into line with greater international competitiveness, in compliance with the criteria established by the EU legislation and by the recommendations prepared by the OECD. In compliance with the European rules on state aid and the principles of harmless tax competition, these measures may also include the granting of incentives for investment or the transfer of capital in Italy for the promotion of economic activities on Italian territory. In relation to these incentives, the enabling law provides that appropriate measures must be established and envisaged to prevent any form of abuse.

In fact, in this regard, in the periodic report presented by the Secretary General to the OECD to the G20 and to the governors of the central banks, meeting in India last February, the main interventions on tax matters were summarized and the results achieved were summarized .

Previously, i.e. on 8 October 2021, an important agreement was reached at the OECD/G20, signed by more than 100 jurisdictions, on a two-pillar solution and aimed at addressing the tax challenges deriving from the digitalization of the economy. The first pillar aims to guarantee a more equitable distribution of profits and taxation rights among the countries in which large multinational companies operate, including large digital companies and by distributing the taxation right among the countries in which they carry out commercial activities and carry out profits. While the second pillar seeks to combat tax dumping, i.e. the shifting of profits where tax rates are lower or non-existent, through the introduction of a global minimum tax of 15% on multinational companies, including those operating in the digital economy, with revenues exceeding 750 million euros per year.

Definition of a global minimum level of taxation for multinationals

Then moving on to the letter e) of art. 3, the transposition of Council Directive (EU) 2022/2523 of 14 December 2022 is envisaged, concerning the definition of a minimum level of taxation for multinational groups of companies and large-scale national groups in the EU, also following the common approach shared internationally based on the OECD Technical Guide on Global Minimum Taxation.

Furthermore, the introduction of a national minimum tax due in relation to all companies, located in Italy, belonging to a multinational or national group and subject to low taxation (number 1) and a sanctioning regime, compliant with the current one, is envisaged in the field of income tax, for the violation of the obligations concerning the minimum taxation of multinational and national groups of companies and an effective and dissuasive sanction regime for the violation of the related information obligations (number 2).

Review of the criteria for determining the taxable income of the CFC

Then as for the following lett. f) of the art. 3, it envisages simplifying and rationalizing the regime of controlled foreign companies, reviewing the criteria for determining the taxable amount subject to taxation in Italy and coordinating this regulation with that implementing lett. And).