Following the introduction of the 2015 Finance Bill, a number of tax changes have come into force in Italy from January 2015. The key points are summarised below.
1. Increase in taxation of Italian pension funds
From 1 January 2015, the substitute tax that is payable on the annual ‘net asset value’ increase in Italian pension funds has increased to 20% (previously 11.5%). Transitional measures have also been introduced for the calculation of substitute tax for 2014. However, tax payable on income derived from public bonds will be limited to ensure that it does not exceed 12.5%.
Alongside the increase in substitute tax, a new pension tax credit (equal to 9% of annual net asset value increase) has been introduced for Italian pension funds that invest a corresponding amount of their annual net asset value increase in qualifying financial activities.
2. Tax step-up election for shares held by individuals
The 2015 Finance Bill has reintroduced the special voluntary step-up procedure under which Italian resident or non-resident individuals have the opportunity, until 30 June 2015, to opt for a step-up in basis of shareholdings in unlisted companies up to the value on 1 January 2015, by paying a substitute tax on the full stepped-up value.
This is a renewal of rules that were already applicable in the past, but the substitute tax rate is now doubled. Namely, the applicable rate is 8% for shareholdings representing more than 20% of the voting rights or 25% of the capital and 4% for non-substantial shareholdings.
3. New self-correction procedures for tax violation
The scope of the self-correction procedures available to taxpayers has been increased to allow the repayment of tax at a reduced penalty rate. Even if a violation has already been identified by the tax authorities (e.g. upon audit), taxpayers may self-correct at a reduced penalty rate, provided they are within the statute of limitations period. The amount by which the penalty is reduced will depend on when the violation is self-corrected by the taxpayer. The statute of limitations for the self-corrected items will lapse when a new tax return is filed.
Self-correction may not be used in cases where the violation has already been assessed through a formal process, such as a deed of assessment, a deed of payment or a notice of irregularity.
Law No. 190, 23 December 2014.
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