Premises
The Budget Law 2023 (Law No. 197/2022) was published in the Official Gazette on 29 December 2022, which introduces many new tax-related provisions.
The Budget Law 2023 comes into force on 1 January 2023, unless otherwise provided for in the individual measures it contains.
To the extent that it is of interest to you, we point out in this circular letter the most significant and relevant measures for tax purposes and on the subject of investments and financial support for businesses.
Tax credits for the purchase of electricity and natural gas – Extension for the first quarter of 2023
Tax credits in favour of companies for the purchase of electricity and natural gas are also recognised for the first quarter of 2023, with an increase in the measures.
Subject to the specific conditions laid down, the tax credits are recognised to the extent of:
- 45% (instead of 40% in the previous quarter) to energy-intensive companies;
- 35% to non-energy consuming companies (instead of 30% in the previous quarter), equipped with electricity meters with an available power of 4.5 kW or more;
- 45% (instead of 40% in the previous quarter) for gas-consuming enterprises;
- 45% (in lieu of 40% of the previous quarter) for non-gas-consuming enterprises.
The tax credits may be used as offsets in the F24 form by 31.12.2023 or may be assigned, only in full, by the same beneficiary companies to other entities, including credit institutions and other financial intermediaries, without the right to subsequent assignment, without prejudice to the possibility of two further assignments only if made in favour of ‘supervised’ entities. The credits must in any case be utilised by the assignee by 31.12.2023.
Tax credit for SME listing on Stock exchange – extension
The tax credit equal to 50 per cent of the consultancy costs incurred for the listing of SMEs is extended to 31 December 2023, increasing the maximum amount from EUR 200,000 to EUR 500,000.
Tax credit for investments in Assents benefiting of the 4.0 incentives – extension
The ‘long’ deadline for investments in capital goods 4.0 booked by 31.12.2022 is extended to 30 September 2023.
The tax credit, therefore, is due for investments that meet the following conditions
- by 31 December 2022, the purchase order has been accepted by the seller
- a down payment of at least 20% has been made;
- the purchase is completed by 30 September 2023 (instead of the previous 30 June 2023).
Tax credits for the purchase of recycled materials
All companies that purchase products made from materials derived from the recycling of plastic packaging, or that purchase biodegradable and compostable packaging or packaging derived from the separate collection of paper, aluminium and glass are granted a tax credit to the extent of 36% of the expenses incurred and documented in the years 2023 and 2024.
The tax credit is recognised up to a maximum annual amount of EUR 20,000 for each beneficiary, subject to an overall maximum expenditure limit of EUR 5 million for each of the planned years.
Sugar and plastic tax
With the Budget Law 2023, the effectiveness of the plastic tax and sugar tax established by the Budget Law 2020 (Law No. 160/2019) is postponed to 1 January 2024.
Participation and lands value step-up
The Budget Law 2023 provides for an extension for the revaluation of the tax cost of unlisted equity investments pursuant to Article 5 of Law No. 448/2001, and extends its scope to equity investments traded on regulated markets or multilateral trading systems. In addition, the revaluation of land (agricultural and building) under Article 7 of Law No. 448/2001 has also been extended.
For 2023, therefore, natural persons, simple companies, non-commercial entities, and non-resident persons without a permanent establishment in Italy will be allowed to revalue the cost or purchase value of participations and land owned as of 1.1.2023, outside the business regime, by franking all or part of the capital gains obtained.
To redetermine the value of unlisted participations and land, an appraisal drafted and sworn by a qualified professional is required by 15.11.2023.
For the redetermination of the cost of securities, quotas or rights traded on regulated markets or multilateral trading systems held as of 1.1.2023, on the other hand, the new para. 1-bis of Article 5 of Law No. 448/2001 provides for the possibility of assuming, instead of the cost or purchase value, the normal value determined on the basis of the arithmetic average of the prices recorded in the month of December 2022 pursuant to Article 9, para. 4, letter a) of Presidential Decree No. 917/1986.
The redetermination of the tax cost of land holdings (listed and unlisted) for the year 2023 provides for the application of the substitute tax at a single rate of 16% that must be paid
- in full, by 15.11.2023;
- or, in the case of the option to pay in instalments, in three annual instalments of equal amount falling due on 15.11.2023, 15.11.2024 and 15.11.2025, respectively; the instalments following the first must be increased by interest of 3% per annum, starting from 15.11.2023.
The redetermination is completed with the payment, by 15.11.2023, of the total substitute tax due or of the first instalment.
Correction of Accounting Errors – Relevance in the Accounting Period
The Budget Law 2023 stipulates that the tax recognition of income components recognised in the financial statements (in the income statement or balance sheet, depending on the materiality of the error) as a result of the process of correcting accounting errors, without the need to submit a supplementary declaration, only applies to entities that have their financial statements audited.
A similar provision is provided for IRAP purposes.
The amendments apply from tax year 2022 (it seems correct to refer to errors corrected in 2022 and relating to income components pertaining to previous years).
Companies operating in the retail trade of consumer products – Depreciation of real estates
For companies operating in the retail consumer product trade sector, the depreciation rate for capital buildings used for such activities is increased to 6%.
The same measure applies to real estate management companies adhering to the tax consolidation scheme, in relation to buildings leased to companies operating in the sectors indicated and adhering to the same group taxation scheme.
The provision applies for the 2023-2027 tax periods.
Nuova Sabatini – deadline extension and refinancing
The refinancing of the ‘Sabatini Law’ is confirmed for 2023. This is the facility of the Ministry of Enterprise and Made in Italy (formerly MISE), which facilitates the acquisition of capital goods by micro, small and medium-sized enterprises (Article 2 of Decree-Law No. 69/2013).
In particular, the measure supports investments to purchase or lease machinery, equipment, plant, capital goods for productive use and hardware, software and digital technologies.
There is also an extension of the deadline for the completion of investments relating to contracts stipulated from 1.1.2022 to 30.6.2023, which increases from 12 months to 18 months. The information is available on the Ministry’s website https://www.mise.gov.it/it/incentivi/agevolazioni-per-gli-investimenti-delle-pmi-in-beni-strumentali-nuova-sabatini.
Increased limits for simplified accounting
As of 1 January 2023, the revenue thresholds that must not be exceeded in the year in order to benefit from simplified accounting are raised from EUR 400,000 to EUR 500,000 for enterprises engaged in the provision of services and from EUR 700,000 to EUR 800,000 for enterprises engaged in other activities.
Substitutive tax for dividends coming from black lists countries.
Franking of profits of investee companies resident in countries with preferential tax regimes
A substitute tax is introduced on the profits and profit reserves of investee companies and entities resident in countries with a preferential tax regime, which, under the general rules, contribute in full to the formation of the Italian recipient’s income once distributed.
Once distributed, the franked profits are no longer subject to taxation.
Both IRES and IRPEF subjects can benefit from the relief (the latter only on condition that the participations are held in a business regime).
The payment of the substitute tax must be made in a lump sum, within the deadline for the payment of the balance of income taxes due for the tax period in progress as of 31 December 2022: for solar subjects, the deadline is therefore 30 June 2023.
The rates provided are equal to:
- 9%, for IRES subjects
- 30%, for IRPEF subjects.
These rates are reduced by three percentage points if, by the deadline for payment of the balance of taxes due for 2023 (for solar subjects, 30 June 2024), the actual repatriation of the profits takes place.
Taxation of Capital Gain on Real Estate Companies
The tax regime of capital gains realised by non-residents (individuals and companies) on the disposal of participations in real estate companies has been amended.
First, capital gains on participations in companies that are also non-resident are taxed in Italy if their value derives predominantly from real estate located in Italy (e.g., the capital gain realised by a party resident in State A on the sale of participations held in a company resident in State B, but whose value derives predominantly from real estate located in Italy, is taxed in Italy).
Secondly, capital gains on non-qualified (unlisted) participations in Italian companies are also taxed in Italy (removing the previous exemption rule, which applied to most subjects), if their value derives predominantly from real estate located in Italy.
However, double taxation treaties that may limit such taxation apply.
“Black list” costs deductibility
Deductibility limits are reintroduced for expenses arising from transactions with companies or professionals resident or located in States or territories considered ‘non-cooperative’ for tax purposes.
Non-cooperative countries or territories are considered to be those identified on the so-called ‘black list’ of the European Union. It currently includes American Samoa, Anguilla, Bahamas, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, Turks and Caicos Islands, US Virgin Islands and Vanuatu.
As a result of the amendments, costs that do not exceed the normal value (i.e., that are in line with market amounts) are deductible in full and without the need to demonstrate the actual economic interest of the transaction, while costs that exceed the normal value are deductible, for the excess, upon demonstration of the actual execution and actual economic interest of the transaction.
In addition, the obligation to indicate costs separately in the tax return is reintroduced. In the event of omitted or incomplete indication of costs, an administrative sanction of 10% of the costs is provided for, with a maximum of EUR 50,000.00.
Investment management exemption
The Budget Law 2023 introduces a rule, already present in other foreign legal systems, that clarifies the conditions for the configuration of a permanent establishment in Italy of foreign entities. The aim is to prevent entities managing investments in Italy on behalf of funds and other non-resident investors (asset managers) from assuming the status of Italian permanent establishment of such companies.
They are therefore supplemented
- the notion of personal permanent establishment, providing that person (including non-residents) who, in the name of or on behalf of the foreign investment vehicle, habitually conclude contracts of purchase, sale or negotiation, or in any case also contribute with preliminary or ancillary transactions to the purchase, sale or negotiation of participations, financial instruments, derivatives and credits, have the independent status;
- the notion of a material permanent establishment, providing that the fixed place of business of the asset manager is not considered to be at the disposal of the foreign investment vehicle merely because the activity carried out therein benefits the foreign vehicle.
The exclusion of the status of permanent establishment is subject to the verification of specific requirements (e.g., related to the location of the foreign investor, independence, remuneration of the asset manager, etc.).
LDP remains at your disposal for any further clarifications.
Milan, January 2023
Best regards,
LDP
