The Italian Revenue Agency launches a public consultation on the advance tax ruling on new investments | Denton

1. Origins

On June 27, 2022, the Italian Revenue Agency (the “Agency”) launched a public consultation on the advance tax ruling on new investments, which should provide more certainty to economic operators when assessment of tax charges related to major investments in Italy. The Agency seeks contributions on relevant areas or on critical issues that hinder the submission of requests for preventive advice from the Agency. Interested parties are invited to send their written comments no later than September 15, 2022.

We recall that the first new investment tax advance ruling guidelines were published in Circular No. 25/E of June 1, 2016 and new administrative guidelines will be drafted once feedback from investors and investment operators will have been collected.

2. Advance tax ruling on new investments: key points

General description

The advance tax ruling on new investments will allow large investors, residents and non-residents, intending to make a large and long-term investment in Italy, to obtain an advance ruling from the Agency on any type of tax issues regarding the specific investment plan (at least 20 million euros) and its implementation.

Eligible investments

The investment project must have the following characteristics:

  • It must be carried out on the territory of Italy.
  • It must have a significant and lasting positive impact on employment.
  • The value of the investment must be at least 20 million euros.

“Investment” means projects involving the realization of a new economic initiative, of a lasting nature (such as those involving the introduction of new liquidity) as well as operations involving the reuse of financial resources already available from a company, aimed at restructuring, optimizing and rationalizing an existing company. The investment must target a company located in Italy and may also involve share transactions.

Eligible investors

The request for an advance ruling can be submitted by:

  1. companies, individual entrepreneurs, other entities engaged in commercial activities (eligible investors in the context of commercial activities);
  2. individuals and non-commercial entities (collective investment schemes) investing in Italian target companies.

Advantages

The Agency is required to issue its official opinion on the tax treatment of the investment, giving explicit feedback on the tax analysis carried out by investors.

The response is binding on the Agency, with regard to the specific business plan as described by the investors, and it is valid as long as the factual and legal circumstances remain unchanged. Once issued, the Agency cannot change its response to the new investment tax ruling request.

With respect to the matters discussed in the response, any administrative act (even if it includes assessments or penalties) issued by tax authorities that contradicts the advance tax ruling provided by the Agency (including the interpretation on which the tacit consent was formed) becomes null and void. Additionally, future valuation activities against investors must be coordinated by the same department that provides the response to the tax ruling.

3. Focus on the advance tax ruling on new investments

The public consultation launched by the Agency demonstrates once again that the Agency itself is aware of the need to encourage investment in Italy also from a tax point of view.

Thus, from this point of view, the advance tax ruling on new investments represents a great opportunity for investors, as it allows them to access the top management of the Agency to have a prior discussion on the tax consequences of the investment they are about to make with the most direct interaction with the Agency.

4. Conclusions

Actors intending to make a significant investment in Italy should seek assistance in assessing possible tax implications and issues to be discussed with the Agency beforehand. In addition, certain questions could also be raised, in general, during this consultation stage.

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