The discipline of the Global Minimum Tax, Simplified Transitional Regimes and Administrative Duties
The last newsletter on the Global Minimum Tax “GMT” is reserved for the analysis of the regulation of simplified transitional regimes and the main reporting and administrative obligations introduced by Legislative Decree No. 209/2023 related to the Global Minimum Tax.
REGULATION OF SIMPLIFIED TRANSITIONAL REGIMES
With the publication of the Ministerial Decree of May 20, 2024 (the first of the implementing decrees adopted by the Italian Government provided for in Legislative Decree no. 209/2023), the MEF regulated the simplified transitional regimes (regimes applicable for a limited period of time that includes fiscal years that begin by 31/12/ 2026 and end by 30/06/2028), provided for by the EU legislator first and then by the Italian one to facilitate the groups for the first years of entry into force of the new rules, mitigating the difficulties they may encounter in implementing effective systems for collecting data and information to be used to perform the timely calculations of the global minimum tax.
The introduction of simplified regimes is governed by Article 39 of Legislative Decree No. 209/2023, which, in its first paragraph, states that the application of such regimes means that the supplementary taxation owed by a group in a financial year for a given country is presumed to be zero if the conditions set out in an “International Agreement on Simplified Regimes” are met. The underlying rationale of the rule is to avoid complex and onerous tax calculations if the target country has low tax risk. Specifically, the tax risk in a given country is considered low when one of the following conditions is met, alternatively:
- Transitional de minimis requirement: to meet this requirement, the group, with reference to the individual country, must satisfy both the following conditions: a) total revenue less than 10 million Euro; b) profit before taxes less than 1 million Euro.
- Requirement regarding the simplified effective tax rate: the requirement is verified if the simplified effective tax rate is equal to or higher than the transitional tax rate. The simplified effective tax rate is determined, in relation to each country, as ratio of: simplified relevant taxes (numerator) and the income before taxes (denominator). Simplified relevant taxes, in turn, are the country’s income taxes of the group’s qualified financial statements, less amounts that do not represent relevant taxes and amounts related to uncertain tax positions reported in the statements. As for the transitional tax rate, this is (i) 15% for fiscal years beginning in 2023 and 2024; (ii) 16% for fiscal years beginning in 2025; and (iii) 17% for fiscal years beginning in 2026.
- Ordinary profit requirement: the requirement is met if the amount of a tested country’s Sbie is equal to or greater than the profit before taxe and, in any case, if the group reports a loss before tax in that country (in the latter case, therefore, the Sbie need not be calculated). The relevant profit before tax is that reported in the MNE group’s Qualified CbCR or as it would have been reported in the Qualified CbCR if the MNE or domestic group had been required to prepare it.
The simplification regime can only be applied upon option of the reporting entity, in the relevant communication to be submitted pursuant to Article 51 of Legislative Decree No. 209/2023 and discussed in more detail in Section 3.1 below. The option is effective for one year and is renewable, with reference to the same country, for the subsequent fiscal years included in the relevant period (i.e., until the fiscal year ending by June 30, 2028).
ADMINISTRATIVE DUTIES
Legislative Decree No. 209/2023 introduced specific obligations and administrative requirements related to the global minimum taxation, which can be represented as highlighted below:
- Relevant communication;
- Annual Return;
- payment of the minimum taxes due.
Relevant Communication
Every enterprise located in Italy or every transparent entity established under Italian law must transmit to the Revenue Agency, pursuant to Article 51 of Legislative Decree No. 209/2023, the so-called Relevant Communication which must contain the following elements:
Ogni impresa localizzata in Italia o ogni soggetto trasparente costituito secondo la legge italiana deve trasmettere all’Agenzia delle Entrate, a norma dell’art. 51 del DLgs. n. 209/2023, la c.d “Comunicazione rilevante” la quale deve contenere i seguenti elementi:
- the identification data of the enterprises, their state of location, and their qualification for GMT compliance purposes
- the information about the structure of the group
- the information necessary for the purpose of calculating the ETR of each country in which at least one enterprise is located, the amount of the supplementary minimum tax relating to each enterprise, and the allocation of the supplementary minimum tax and the supplementary minimum tax in relation to each country
- the options exercised or revoked
It is possible, for this purpose, to designate an enterprise located in Italy to fulfill this obligation. Moreover, the fulfillment is not required if it was carried out by another group enterprise located in a state that has a qualifying agreement with Italy aimed at the exchange of relevant communications between Administrations.
The procedures for submitting the communication will be determined by a Ministerial Decree that has not yet been issued.
With regard to the submission deadlines, Art. 51 co. 7 of Legislative Decree No. 209/2023 stipulates that the relevant communication must be submitted by the 15th month following the last day of the fiscal year to which it refers (e.g. by 31/3/2028, for the tax period 01/01/2026-31/12/2026). With reference to the so-called “transitional” fiscal year (defined, by Art. 54 of the Legislative Decree in comment, as the year of first application of the GMT provisions), Art. 58 of Legislative Decree No. 209/2023 provides that, the relevant communication can be submitted by the 18th month (therefore, assuming that the tax period 2026 is the “transitional” fiscal year, the relevant communication will have to be submitted by 30/6/2028).
With reference to the penalty regime, the following penalties will be applied depending on the violation committed:
- if the communication is omitted, or submitted with a delay of 3 months or more, there is an administrative penalty of Euro 100.000,00;
- if the communication is submitted with incomplete or false data, or with a delay of less than 3 months, the penalty ranges from Euro 10.000,00 to Euro 50.000,00.
The total penalty may not exceed 1 million euros with reference to all group companies located in Italy for each fiscal year (Art. 51 co. 9 of Legislative Decree No. 209/2023).
Annual Return
It is also provided by Art. 53 of DLgs. No. 209/2023, the obligation to submit an annual return on the minimum supplementary tax , referring to all its three components. The submission deadline is the same as seen for the relevant communication described in the previous paragraph.
Again, the procedures for submitting the communication and the operating instructions necessary for its filing will be established by a Ministerial Decree that has not yet been issued.
Minimum Tax Payment
The minimum supplementary tax must be paid in two tranches: the first, which must cover 90 percent of the amount due, must be paid within the eleventh month following the last day of the fiscal year to which it relates; the balance, within the last day of the month following the month in which the annual return is filed (Art. 53(2)). For instance, for the tax period 01/01/2026-31/12/2026, the first installment is due by November 30, 2027 while the balance is due by March 31, 2028.
Violations related to non-compliance with payment obligations are sanctioned with the same penalties as for income taxes (according to Art. 13 of Legislative Decree 471/1997, in case of omitted payment the penalties are 25% of the unpaid amount; 12.50% of the unpaid amount, if made with a delay not exceeding 90 days; 0.83% of the unpaid amount for each day of delay, if made with a delay not exceeding 15 days).
Penalties in the first three fiscal years
According to Art. 53 co. 5 of LD No. 209/2023, for the first three fiscal years of application of the provisions on global minimum taxation, penalties will be imposed only in cases of intent or gross negligence.
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