On August 14, 2023, Law Delegation No. 111/2023, which contains numerous guidelines for the government to follow in the adoption of legislative decrees for the comprehensive reorganization of existing provisions governing the current tax system, was published in the Official Gazette.

The government has a 24-month timeframe from the date of the law’s entry into force to adopt the legislative decrees necessary for the comprehensive reorganization of provisions and the revision of the tax system based on the general and specific guiding principles outlined in the delegation law. In this circular, we highlight the most significant and relevant measures for businesses from a tax perspective.

Reorganization of Corporate Income Tax (IRES)

The law introduces a two-rate regime (standard and reduced) for IRES. The reduction of the IRES rate is envisaged in cases where income is invested (particularly in qualified investments), new hirings are made, or employee profit-sharing schemes are implemented. For companies that do not qualify for the reduced rate, the law enhances the depreciation of qualified investments and the potential increase in deductibility of costs related to new hirings.

Additionally, the law includes provisions for:

  • Aligning tax values with accounting values.
  • Revising the deductibility of interest expenses.
  • Reorganizing the loss offset regime.
  • Rationalizing the rules for business contributions and share exchanges.
  • Establishing special rules for the transfer of assets between commercial and non-commercial activities.
  • Rationalizing the internal tax classification of foreign entities.



Article 8 introduces an extensive overhaul of the IRAP aimed at gradually abolishing the tax (starting with partnerships and professionals) and concurrently instituting a surtax, maintaining the tax burden at a level determined using the same rules as IRES. This surtax aims to ensure regional funding for healthcare needs and support for regions with budget imbalances or recovery plans.


Value Added Tax (VAT)

The reorganization of VAT regulations must be consistent with Union law, which cannot be derogated by domestic legislation. Key aspects of the VAT delegation include:

  • Provisions governing exempted transactions.
  • Rationalization of the number and rates of VAT brackets.
  • Review of deduction rules to better reflect the actual use of goods and services for taxable operations.
  •  Reduction of the VAT rate on the importation of works of art.
  • Rationalization of the VAT group regime and VAT treatment for third-sector entities.
  • Article 18 revisits the rules for VAT refunds with the aim of simplification and streamlining.


Business Crisis

Article 9 of the law provides for a revision of the income tax system for companies accessing the arrangements under the business crisis and insolvency code (Legislative Decree No. 14/2019), as well as for giving relevance, in terms of deductibility of losses on claims against such companies, to access to new liquidation or recovery arrangements under the business crisis and insolvency code. The law also addresses the tax treatment of positive components, specifying that proceeds from liquidation-type arrangements are not taxable, while for non-liquidation procedures, any reduction in debt obtained does not constitute taxable income, provided it exceeds losses, deductions, and the ACE excess (Article 1, paragraph 4, Legislative Decree No. 201/2011), as well as passive interest and similar financial charges under Article 96(4) of the TUIR.


Inactive Company Regulations

The law delegates the government to revise the regulations governing inactive companies, defining new criteria and revising exclusion criteria to consider factors such as the presence of a substantial number of employees and activities in regulated sectors.


Alignment of Tax Values with Accounting Values

To reduce administrative burdens on businesses, Article 9, sections c) and d), provides for the simplification and rationalization of business income while preserving the principles of relevance, tax neutrality for corporate reorganization transactions, and the prohibition of abusive tax avoidance. This includes revising partially deductible costs and strengthening the process of aligning accounting values with tax values. Section d) specifically delegates the government to enhance the alignment process of tax values with accounting values, including simplifying the Civil Code provisions on accounting, especially for smaller companies, and revising Legislative Decree No. 38/2005 to allow entities using International Accounting Standards (IAS) for consolidated financial statements to apply them to their annual financial statements.


Extraordinary Transactions

The delegation includes provisions for introducing tax regulations for partial corporate splits as governed by Article 2506.1 of the Civil Code, as well as simplifying the standard liquidation of individual businesses and commercial companies, establishing, in principle, the finality of income for each tax period.


Customs and Excise

Articles 11, 12, and 15 concern taxes under the jurisdiction of the Customs and Monopolies Agency, namely customs regulations (Article 11), excise taxes and other production and consumption taxes (Article 12). Customs and excise provisions have a Union basis, and the delegated legislator must consider EU provisions.

Regarding customs, the bill aims to update the regulations, especially the Tariff and Customs Code (TULD) of Presidential Decree No. 43/1973, due to obsolescence and inapplicability of certain provisions in light of EU law developments, particularly digitalization and telematics.

For excise taxes and other indirect production and consumption taxes (regulated by the TUA of Legislative Decree No. 504/1995), the plan is to redefine rates for energy products (fuels and fuels) and electricity to gradually reduce environmental pollution by incentivizing environmentally friendly energy products. This includes revising excise rates on energy products used for electricity production, gas from biomass, or other renewable resources based on their environmental impact.


Taxpayer Obligations

The law delegation grants ample scope for the revision of tax obligations with the explicit goal of rationalizing, simplifying, and harmonizing declaration deadlines, declaratory requirements (with a particular focus on ISA reliability indices), and other obligations, aiming to make compliance easier for taxpayers. Delegated decrees should simplify forms, introduce rewards for using pre-filled declarations, and exclude benefit forfeiture for minor formal violations, while encouraging tax certification activities, including integrated systems, and their compliance with accounting principles.

The law also includes measures to simplify and enhance the relationship between taxpayers and tax authorities, including the implementation of digital services to reduce tax evasion and avoidance. It envisions strengthening tools for data and document sharing between the Revenue Agency and municipal offices (e.g., identifying unregistered or unauthorized properties) and improving staff specialization and digital technology proficiency.

Additional measures include enhancing reward schemes, the mandatory publication of forms “at least sixty days in advance” of the obligation’s deadline, and expanding payment methods (e.g., direct debit and electronic payments).



The law delegation aims to streamline the interpellation process, given the high volume of inquiries received by the Revenue Agency. It envisions issuing interpretative documents (circulars), with input from industry associations, strengthening the prohibition on submitting interpellations when answers can be obtained through previously issued practice documents. Interpellations would be reserved for individuals and smaller taxpayers only in cases where quick written responses are not feasible.

The delegation also contemplates the possibility of requesting a fee, graduated based on various factors such as taxpayer type or the value of the question, to finance specialization and ongoing professional training for tax agency staff.


Tax Audits

In the effort to modernize tax administration, Article 17 outlines principles and guiding criteria for audit, compliance, and voluntary compliance procedures, directing controls towards taxpayers presenting higher fiscal risks while safeguarding loyal taxpayers. This approach enhances rights and protections, focusing on compliance and cooperative compliance, using new digital technologies for controls applicable to both national and local taxes. These principles and criteria apply to customs and excise as well, with specific and differentiated rules.

The audit reform framework includes:

  • Simplifying audit procedures, leveraging digital technologies to reduce administrative burdens on taxpayers.
  • Implementing a contradictory principle, “under penalty of nullity,” with exclusion of automated checks.
  • Affirming the taxpayer’s right to participate in the tax process.
  • Setting a reasonable period (not less than 60 days) for submitting observations and objections.
  • Requiring tax authorities to expressly justify assessment decisions in response to taxpayer objections (similar to Article 12, paragraph 7, Law No. 212/2000, granting taxpayers the right to submit observations and requests within 60 days from the end of the verification period, which are assessed by tax offices).
  • Revising rules on the statute of limitations for components with multi-year effectiveness, commencing “from the tax period in which the triggering event occurred,” contrary to the position of the United Sections of the Court of Cassation, which consider successive years independently for limitation purposes (Cass., SS.UU. March 25, 2021, No. 8500).
  • Limiting the possibility of presuming higher positive income components and lower negative income components based on the market value of assets, except in cases where “other relevant elements are present.”

The delegation includes a specific provision allowing the presumed distribution of income to shareholders for capital-based companies with limited shareholder bases, only when certain conditions are met. The law delegation includes numerous provisions to expand the cooperative compliance regime provided for in Articles 3 and subsequent articles of Legislative Decree No. 128/2015 (both for punitive purposes and in terms of statute of limitations). For small taxpayers with business and self-employment income, the introduction of a biennial voluntary compliance scheme is proposed. Taxpayers can accept a proposal for a biennial determination of taxable base, resulting in the irrelevance of income for income tax, IRAP, and mandatory social security contributions, compared to what was agreed upon in the voluntary compliance. However, taxpayers accepting the voluntary compliance scheme remain subject to audits, controls, and assessments, as well as accounting and reporting obligations, and forfeit the scheme if higher revenues or compensation exceeding a certain threshold or significant tax violations are identified.


Refunds and Collections

The law provides solutions to increase the efficiency of national and local tax collection systems by simplifying and orienting activities based on principles of effectiveness, cost-efficiency, and impartiality. This makes the Financial Administration’s efforts to recover debts more efficient. The law also enhances the enforceability of enforcement measures and the ability to place liens and seizures on third parties (e.g., taxpayers’ bank accounts). On the other hand, the law extends the installment payment terms (from 72 to 120 installments).

With a focus on strengthening coercive collection, the law also foresees “the gradual elimination of the role and payment notice tool” to expedite the collection of debts owed by debtors, reducing the time needed to initiate precautionary and enforcement actions, while extending the effectiveness terms of collection actions (extension of statute of limitations).

As for refunds, the law envisions simplifying and expediting refund procedures. The law delegation also includes the possibility of entrusting private entities, through a public tender procedure, with the management of coercive collection in exchange for a commission based on the amount actually collected.



The delegation includes a comprehensive intervention in tax, administrative, and criminal penalty matters, including customs and excise sanctions (Article 20). The law outlines various areas for intervention, starting with common aspects of administrative and criminal sanctions. It aims to achieve greater integration between administrative and criminal sanctions, revisiting the relationships between criminal and tax procedures (especially in light of introducing written testimony in tax proceedings) and considering improper and ancillary sanctions.

In particular, the delegation requests avoiding forms of double penalties inconsistent with the prohibition of double jeopardy, including atypical security measures. The law also contemplates revising cases of non-punishment and mitigating criminal sanctions related to administrative proceedings, aligning these institutions with the actual duration of tax debt extinction plans (Article 13, paragraph 3, Legislative Decree No. 74/2000 stipulates that, concerning non-punishment and mitigating criminal sanctions, if the tax debt is being extinguished through installment payments before the opening of the first-instance trial, a three-month period is granted for payment of the remaining debt).

Regarding administrative sanctions, the law delegation includes a provision to revise cumulative and continuation sanctions (Article 12, Legislative Decree No. 472/1997), extending this to deflative institutions. The delegation also provides for the exclusion of administrative sanctions for all tax risks communicated in advance, provided the detection system implemented by the taxpayer is certified by qualified professionals. However, cases of fraud remain subject to sanctions (in such cases, at least a 2-year reduction in the statute of limitations for assessment is provided). The law also excludes criminal sanctions, particularly those related to false statements, for taxpayers participating in the cooperative compliance regime who have pre-emptively communicated tax risks associated with the operation.

The Firm is available for any further clarification.
Milan, September 2023

Best regards,

LDP provides Tax, Law and payroll  scalable and customised services and solutions. LDP Professional have also matured a significant expertise in  M&A, Corporate Finance, Transfer Price, Global Mobility Consultancy and Process Automation. 

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