Italian Inland Revenue has finally taken a clear position on the consequences of the declaration of unconstitutionality under judgment No. 10 of 11 February 2015 of the Supreme Court.
In particular, Inland Revenue has replied to the queries raised on the occasion of our circular of last month on the issues concerning the so-called Robin Hood Tax (RHT).
The most significant elucidations are the following:
Effectiveness of the unconstitutionality
As a matter of fact, the Agency has embraced the fairest theory put forward by law scholars and to which we made cross-reference in our previous Circular as Theory 2: as mentioned, the declaration of unconstitutionality is effective as from the tax periods commencing on the day following the publication of the judgment in the Official Gazette (that is as from 12 February 2015). Therefore, the taxpayers with a period which coincides with the solar year shall be under the obligation to pay the advances and the relevant balance for the 2014 tax period, according to the natural expiries, whilst they shall not be subject to the increase foreseen by the RHT with respect to the 2015 tax period.
Likewise, the taxpayers with a period which does not coincide with the solar year shall not be subject to RHT effective as from the tax period in place as at 12 February 2015.
Surplus set-off
In Inland Revenue's opinion surtax keeps, compared to IRES (Corporate Income Tax) a standalone nature which therefore, does not allow to consider any payment surplus as IRES (Corporate Income Tax) surplus in the literal sense. This means that vertical set-off is not allowed, but only horizontal set-off under article 17 of Legislative Decree No. 241 of 1997 to be carried out always subject to a Euro 700,000.00/year threshold.
Past losses
The Inland Revenue has then given two further elucidations in connection with the use of past losses. In particular, it has confirmed that:
- the carry-forward of past losses is taken into account both for calculating the taxable base of IRES (Corporate Income Tax) and for that of surtax, even if such losses are accrued in past periods to those in which the surtax has been applied
- for the purposes of identifying the taxpayers under the obligation to apply the RHT surtax and, in particular, for the purposes of checking if the taxable income threshold (Euro 300,000.00) has been exceeded, past losses are relevant, regardless of the period in which they were accrued, to the extent that it is necessary to refer to the income of the financial year, as offset with past losses.
Read more about tax compliance in Italy.
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