Italy Removed Malta and Cyprus from Black List

Posted on August 2, 2010 by Marco Rossi

By way of a ministerial decree issued on July 27, 2010 Italy removed Malta and Cyprus from the black list for the purposes of the application of Italian controlled foreign companies rules and provisions on tax residency of individuals. As a result of the removal, Italian owned foreign companies established in Malta and Cyprus are no longer subject to Italian CFC rules, and  Italian individuals who move to Malta or Cyprus are no longer presumed to be resident in Italy for tax purposes unless they prove the contrary (the burden to prove that the move is fictitious and tax residency remained in Italy is upon the tax administration). Finally, Cyprus has been inserted in the white list for the purposes of the application of the portfolio income exemption exempting foreign source portfolio investment income from Italian 12.5 percent withholding or substituted tax.        

Tags: , , , , , ,

New Law Requires Additional Disclosure of Abusive Transactions

Posted on June 7, 2010 by Marco Rossi

Starting from July 1, Italian enterprises doing business abroad shall have to file a monthly or quarterly return reporting all their transactions entered into with foreign enterprises organized or domiciled in black listed jurisdictions.

According to article 110(10) of Italy's tax code, deduction of costs, expenses or losses arising from transactions entered into with enterprises based or domiciled in black listed jurisdictions is denied, unless the taxpayer can prove that (i) the transaction served a legitimate business and economic purpose going beyond tax saving and has been actually carried out, or (ii) the foreign enterprise is engaged in a real trade or business in the country in which it is organized or domiciled. In addition, all costs, expenses or losses must be separately stated on the annual income tax return. 

As a result of the new law, an Italian enterprise doing business with foreign enterprises organized in a black listed country shall also have to file an additional monthly or quarterly return reporting all its transactions with those enterprises.

Italy's Minister of Finance is expected to issue a new list of countries allowing exchange of tax information with Italy, which will fall outside the scope of the disclosure and non deduction rules.  

 

 

 

Tags: , , ,