Italy Restricts VAT Deductions For Vehicles Expenses

Posted on November 1st, by Global Tax Weekly in Sales Tax. No Comments

On October 16, the European Commission published a proposal for a Council Implementing Decision enabling Italy to continue restricting the right to deduct input VAT on vehicles-related expenses.

On April 12, 2019, Italy had requested an authorization to continue to derogate from the EU VAT Directive by limiting to 40 percent the right to deduct input VAT charged on expenditure related to motorized road vehicles not wholly used for business purposes. The Commission said that the rate of 40 percent appears to reflect adequately the actual business use of such vehicles.

In addition, Italy requested an authorization to continue to derogate from the VAT Directive by exempting from VAT the use for private purposes of vehicles included in the assets of a taxable person’s business, where such vehicles are subject to a restriction of the right to deduct.

Italy was first authorized to … Read More »

Italy Ponders Tax Reforms

Posted on October 31st, by Global Tax Weekly in Budgets. No Comments

Italy’s tax regime leaves a lot to be desired. Although, there are some disagreements, and principally how bad things are. The Tax Foundation ranks Italy 34th out of 35 OECD economies, so it’s safe to say that there’s room for improvement there. PwC, on the other hand, places the country in 112th place globally. That means it’s (albeit marginally) easier for a business to pay its taxes in Lesotho (111th), the Federated States of Micronesia (110th), and the West Bank and Gaza (109th), which is hardly a ringing endorsement of the Italian tax system. In other words, opinions of Italy’s tax regime range from dire to disastrous.

However, for all its controversial policies, one thing that Italy’s populist coalition Government is trying to achieve is to give business taxpayers something of a break. For small firms and the self-employed, there’s a … Read More »

Italian Companies Given Paths To Avoid Double Taxation

Posted on June 22nd, by Global Tax Weekly in Corporation Tax. No Comments

Profound changes are afoot generally, both politically and technologically. However, it’s good to know that beneath the quaking and shaking, it’s business as usual. And there’s nothing like a good transfer pricing development to distract you from the turbulence and turmoil generated at government level in various places.

In Italy, for example, we can forget for a moment the uncertainty caused by the recent election of the most unlikeliest of coalition arrangements and instead get our teeth into “Provvedimento 108954/2018,” setting out how Italian companies can request a “downward adjustment” to their taxable income in Italy following a transfer pricing adjustment in another territory, to avoid double taxation. If that doesn’t take your fancy, then there’s always the Ministry of Finance’s consultation on whether to support the EU’s digital tax plans, and in particular, its proposal for an “interim tax” on … Read More »

New Italian Coalition Government Leads To Tax Uncertainty

Posted on May 23rd, by Global Tax Weekly in Elections. No Comments

What’s this? A political party called Five Star? Founded by who? A comedian? What? In Power?! With who? You mean Silvio’s back? And a flat tax? On corporate income too? In Italy?!

Yes, it can only be the latest edition of “voters do the funniest things.”

We’ve seen some unusual coalitions formed and attempted recently, unholy alliances between populist anti-establishment and mainstream parties. But Italy must top the lot. It’s difficult to pin down exactly where the Five Star Movement stands on the political spectrum, but it’s safe to assume, I think, that they are a long way from the nationalist overtones of the Lega Nord.

So what does all this mean for taxpayers? It’s difficult to say. One thing that the parties do have in common is their euroskepticism. But, given Lega Nord’s previous calls for a referendum on Italy’s membership of … Read More »

Tax Upheavals Loom In The Wake Of Italian Elections

Posted on March 21st, by Global Tax Weekly in Elections. No Comments

Okay, imagine this scenario if you will: it’s November 2018, and finally you’ve got all your tax planning ducks in a row now that Congress has fixed the broken bits of the tax reform legislation, and the Internal Revenue Service has issued most of the necessary guidance to help taxpayers comprehend the more novel parts of the Tax Cuts and Jobs Act. You’ve got your deductions lined up, your QBI sorted, you’ve avoided a BEAT, and you’re sure you’re not GILTI. Now you can breathe a sigh of relief.

But what’s this? You’ve been so engrossed in tax planning that you’ve forgotten about the elections. “Didn’t we just have one of those,” you think to yourself? Yes, but that was the Presidential election, and that was two years ago. This is the mid-terms, and the Democrats have won Congress back. And … Read More »

Italy Looking To Attract Foreign Taxpayers

Posted on August 15th, by Global Tax Weekly in Expatriates. No Comments

In the UK, it is interesting that while the Government continues to dismantle the “non-dom” regime, under which wealthy foreign taxpayers (for the most part) don’t pay tax on their overseas earnings as long as those earnings stay offshore, Italy is creating its own non-dom regime, aimed at attracting the sort of entrepreneurial types that have been lured to London for decades, centuries even.

Indeed, a number of European countries that have struggled to compete with the UK on tax now appear to be falling over themselves to lay out the red carpet for London bankers and other highly remunerated professionals who contribute substantial sums in tax. France has been banging this particular drum for a number of months now, albeit without doing much about it, and the German state of Hesse – home to Frankfurt, continental Europe’s main finance center … Read More »

Italian Revenue Agency Reaches Agreement With National Soccer Federation

Posted on May 10th, by Global Tax Weekly in Individual Taxation. No Comments

This week, I’ll be looking at the often-murky world of soccer. It is the planet’s most-watched sport, but it’s never far from controversy, as the FIFA corruption scandal demonstrated. It also has its fair share of run-ins with the taxman too, with the recent raids of two prominent English soccer clubs the latest such development.

However, this is an issue of wider significance, rather than one confined to the tax controversies at the top end of sport. And, appropriately enough, it also touches on the subject of tax competition too.

Some governments are more than willing to offer tax concessions to attract highly skilled – and highly remunerated – workers and investors to their shores. But, to my knowledge, such concessions rarely seem to be extended to professional sports people, including in the soccer world.

The issue of executive pay, the king’s ransom that some … Read More »

Italy Increases Duties To Reduce Fiscal Deficit

Posted on February 27th, by Global Tax Weekly in Duties. No Comments

It is frequently said that governments give with one hand and take back with the other with tax policy, particularly at budget time. And the greatest trick of the finance minister is to do this without anyone really noticing. They don’t always pull it off though, because some clever so-and-so in the media, or whose job it is to hold governments to account, usually notices such creative budgetary accounting and broadcasts it. But still they try.

Italian taxpayers must be getting used to this game of give and take. There, the Government is desperate to deliver meaningful tax cuts in line with its policy of reducing economy-strangling tax and regulation. But it’s struggling to deliver. Spending must be cut, not only for the health of the Italian economy, but also under EU fiscal rules designed to prevent runaway deficits. But spending cuts … Read More »

Italy To Cut Corporate Tax

Posted on October 25th, by Global Tax Weekly in Corporation Tax. No Comments

At the bottom of the EU/EFTA league table is — not that surprisingly — Italy, with an eye-watering total tax rate of 64.8 percent. Therefore, the recent approval by the Government of a draft budget with a heavy emphasis on cutting corporate tax was probably greeted with a degree of relief by most of Italy’s businesses. However, as is the case with most of the countries towards the bottom end of the ranking, the bulk of this tax burden consists of labor taxes. 43.4 percent in Italy’s case. I can’t knock the Government for approving what is, in the context of Italy’s fiscal restraints, a fairly bold business tax improvement plan. But perhaps Prime Minister Matteo Renzi is looking in the wrong place in his attempts to improve Italy’s competitiveness. Or, more to the point, perhaps he should be looking … Read More »

Tax Freedom Day Comes ‘Early’ In Italy

Posted on June 6th, by Global Tax Weekly in Individual Taxation. No Comments

On a slightly upbeat note, congratulations go to Italy’s taxpayers for celebrating “tax freedom day” a little earlier this year. For those unfamiliar with the concept, tax freedom day is the theoretical day in the year when you stop working to pay the government, and start keeping what you earn for yourself. And in that sense, I suppose it is a good indicator of just how much of a country’s income is taxed in one form or another.

Although most Americans are heard to grumble about their taxes, in the United States tax freedom day normally arrives well before summer (in the northern hemisphere), usually towards the end of April. But if you think things in Italy are bad, try living in Belgium, where, shockingly, last year you had to work into August before pocketing your own money! For Italy … Read More »


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