Italy’s Tax Administration provided additional clarifications on Italian taxation of trusts. In particular, Circular n. 61/E issued on December 27, 2010 addresses the situations in which a trust is disregarded as abusive or fictitious interposition between the settlor and the assets and income of the trust and must be disregarded for tax purposes. Circular 61/E expanded the list of examples of abusive situations and shows the administration’s willingness to contrast the use of trusts for tax avoidance purposes.…

The European Court of Justice blessed international tax arbitrage in a VAT transaction by means of which taxpayer was able to obtain a credit for input VAT on purchases while avoiding payment of output VAT on sales. The result was obtained thanks to an inconsistent characterization of the transaction for VAT purposes under UK and German law. UK treated the transaction as a financial service taxable in the country of supplier (Germany), while Germany treated it a as a sale of goods taxable in the country of the goods are sold (UK).…

Italy issued circular 58/E with guidance on transfer pricing documentation for multinational companies. The tax administration clarified that failure to file the transfer pricing documentation notice may be considered as a factor to select taxpayer that will be subject to audit…

In a post on December 3, 2010 we reported on a recent ruling issued by the Italian tax court of Emilia Romagna against an Italian banking group in respect of a series of structured finance transactions aimed at obtaining abusive tax benefits (mainly, foreign tax credits under applicable tax treaties).

Based on a copy of…

EU Council of Finance Ministers approved new draft legislation reinforcing exchange of tax information for contrasting tax evasion throughout the EU. The directive shall eliminate the banking secret and ultimately starting from 2015 the exchange of information will be automatic in several areas of tax law which fall within the scope of the directive.…

Italian tax court ruled against Italian bank on tax abusive transactions involving use of derivative contracts to generate tax credits and double dips. Italian tax administration wishes to rely on the ruling to resolve similar dispute with other banks. The total amount of income that can be recaptured is around three billion with an additional tax in excess of one billion plus interest and penalties. Additional comments on the ruling will follow on our blog…

Mutual funds give investors an opportunity to participate in diversified investment holdings and access to professional managent on the face of a relatively small investment.

The Italian tax treatment of domestic mutual funds is designed to provide portfolio investors with the same tax treatment they would receive if they owned directly the same investments that…

Marco Rossi was one of the speakers at the meeting organized by the Chartered Institute of Taxation in Milan on October 15, 2010. Marco presented on transfer pricing documentation requirements from the perspective of the United States and regional organizations such as PATA, EU and OECD. Italy recently enacted its own rules on transfer pricing…

Italy issued ruling implementing transfer pricing documentation requirements. Italian transfer pricing documentation framework largely mirrors the EU transfer pricing documentation of conduct and OECD Guidelines. Strict deadlines apply to transfer pricing documentation for 2010 and prior years. Compliance with new transfer pricing documentation requirements allows protection from penalties.…

Il giorno 30 Settembre scade il termine per la presentazione della dichiarazione annuale dei redditi delle persone fisiche per l’anno 2009. Contestualmente alla presentazione della dichiarazione annuale dei redditi i contribuenti residenti in Italia che detengono investimenti all’estero devono compilare il modulo RW. Inoltre, nello stesso termine è possibile presentare la dichiarazione integrativa relativa all’anno 2008 e sanare eventuali violazioni degli obblighi di compilazione del modulo RW per il 2008 secondo il meccanismo del ravvedimento operoso con il beneficio della riduzione della sanzione ad 1/10 del minino pari all’1% degli importi non dichiarati.