LDP TAX
LDP provides a Tax & Accounting extensive and comprehensive advising and also support for the preparation of corporate tax returns in Italy, for multinational companies. LDP covers from the everyday transactions up to strategic business advice such as Merge & Acquisition, Corporate Finance and Transfer Pricing. We can also arrange your financial statements, company secretary services managing everything you need under one roof.
As you know tax compliance is strictly policed to ensure that Countries are collecting the revenues they need. So, it is not enough to meet all the necessary deadlines but also to respect the Transfer Pricing law, double treaties applications and OECD rules, LDP our expert will drive you with their long expertise.
Through our international network of overseas tax and accounting professionals, we connect you with a team of Tax experts all over the World
Solutions Tax
LDP has matured a significant expertise in Tax matters related the day to day advice, M&A, Transfer Pricing and other areas better describe hereafter
Company & Branch incorporation
- In Italy, the most common limited company is Private Limited Company by quotas ( Società a Responsabilità Limitata) S.r.l. and Public Limited Company by Shares (Socetà per Azioni – S.p.a)
LDP Company formation services:
- recommendation on most suitable Italian company type to be incorporated;
- supporting in the opening of an escrow account for the share capital deposit;
- drafting of public deeds of incorporation and company bylaw;
- arranging Public Notary procedures and certified translations;
drafting of shareholder agreement if requested; - obtaining VAT and Tax code in one day;
- Newco registration at Trade Register – within 5 days from the Public Notary Act;
- support in opening a bank account;
- providing company domicile.
Branch or Permanent Establishment
Italy offers the opportunity to set up a branch office also called permanent establishment. The incorporation takes about one week and is not requested by the physical presence of the Client or its representative. hire employees, lease office and so on. Since is not considered a separate legal entity despite Transfer Price rules. A Branch has the same obligations of a limited company such as: keeping the accounting, respect the tax compliance deadline and it is a taxpayer.
LDP Branch services:
- drafting of the board of directors’ minutes;
- arranging Public Notary procedures and certified translations;
- branch registration;
- obtaining of VAT and tax code;
- provide support for the bank account opening;
- tax compliance, keeping the accounting and provide the reporting package for the mother company;
LDP offers a “turnkey” service
Tax Compliance
Be compliant with the Tax and Accounting with the Civil and Tax law it is mandatory in Italy and it is a key factor; The main register to be filled in are Vat and Journal book. There are proper software that allowed to combine the double-entry with all the tax and vat implication
LDP Tax & Accounting services:
- Tax advice on Italy compliance-relevant subjects;
- Tax computation, preparation and delivery of tax returns;
- Arrangement of non-tax-deductible expenses;
- Vat computation and quarterly/year compliance;
- Sanction check;
- daily bookings;
- Accounting of fixed assets;
- Salary accounting;
- Quarterly reports to Italian tax authorities, including preparation of all relevant closings and reports to social funds;
- Calculation and reporting of all types of taxes;
- Preparation of all bookkeeping documents for monetary transactions;
- Filing of bank reports;
- Consulting on Italy finance, daily accounting and taxation matters;
- Preparation of all HR documents demanded by Italy law.
Merge & Acquisition
Growth thought strategic acquisition is a topic for many companies and this involves synergies and professionals that can properly address during all the acquisition phases starting from the identification of the target company, the various due diligence, drafting and negotiation of the share purchase agreement (SPA) and the shareholder agreement, support during the closing phase.
LDP as an Italian member of the LEA Global, the second-largest international association in the can support the cross-border acquisition in more than 10 different countries.
LDP M&A services
A complete assistance including cross border merger, LDP provides Tax, Accounting, Legal, financial and labour due diligence, vendor due diligence, data room organization
Tax Due diligence
Tax Due Diligence is more than recommended in case of acquisition or sales of shares, going concerned, work for equity.
LDP Tax Due diligence services:
data room services, procedures and organization;
- Tax, Financial. Legal, Accounting and payroll, Due Diligence;
- conduct a post-acquisition audit;
- maximizing Client financial and tax position;
- drafting a price adjustment or warranty and indemnity clause;
- managing any potential litigation and claims processes.
VAT UE and Tax Representative
LDP provides turnkey support for UE Vat and Tax Representative registration and compliance, in this regards the services provided are the following:
LDP Vat UE and Tax Representative
- obtaining Italian VAT number for UE
- Companies and Tax Representative;
- VAT accounting services;
- VAT computation, VAT return preparation and delivery;
- VAT payments;
- VAT Italy refund.
Transfer Pricing
LDP Team is composed by professionals with international experience who matured a significant expertise leading multinational companies in more twenty years of expertise both in the field of transfer pricing and economic evaluations.
LDP expertise I Transfer Pricing covers also royalties management, intercompany loans, management services, transfer pricing litigation across many business sectors..
LDP Transfer Price services:
- benchmark analyses using the databases (AMADEUS and AIDA) the same adopted by the Italian Tax Administrations and international best practice;
- preparation of the entire documentation on transfer price: Country file and master file;
- international tax planning and consultancy on value chain restructuring activities;
- assistance in tax litigation regarding Transfer Pricing and Permanent Establishment
What are the main features of an S.r.l. and S.p.a.?
share capital
Private Limited Company -S.r.l. isn’t required a minimum of capital, but it’s recommended to start with capital that guaranty a regular cash flow while for a Public Limited Company – S.p.A. is required a minimum of €50.000;
Quotas vs shares
S.r.l. capital is divided into quota while S.p.a. capital is divided into several types of of shares; foreign shareholder has allowed to invest in Italian company. Both S.r.l, and S.p.a. could have a sole shareholder and a Sole Director instead of a board of Director. Directors could be foreign.
What is the benchmark analysis used for?
Benchmark Analysis
In order to verify the respect of the “arm’s length principle” within the intercompany transactions carried out by an MNE, the OECD Guidelines provide the possibility of using a transactional method, based on an analytical approach.
The benchmark analysis is aimed at search for companies engaged in transactions compared to those carried out by the “tested party” (i.e., the MNE or its subsidiaries), in order to identify an arm’s length range of profit margins for the activities under analysis.
What are the advantages of setting up transfer pricing?
In order to obtain the penalty protection, taxpayers have to declare the possession of the documentation in the annual tax return (“check the box”).
Depending on the group structure, either both a Master File and a Local File or just the Local File need to be prepared.
A table will be set up and will summarize all the documentation required for each level of the ownership structure.
The TPD must be prepared in Italian.
What is the deadline for filing the tax return?
The 9th month after the FY end. With reference to FY 2019, the deadline for submitting the tax return is November 30, 2020
Is it allowed to integrate the tax return to communicate the possession of the documentation?
Yes, the taxpayer is allowed to present an integrative declaration within the deadline for filing the next year tax return (e.g. FY 2019 tax return is amendable in favour of the taxpayer until FY 2020).
How to Set Up a Compnay in Italy?
the founder(s) is/are requested to execute an incorporation deed which includes memorandum and articles of association (drafted by LDP), before an Italian Public Notary. The good news is that the incorporation process can be carried out by distance through a power of attorney granted to one of our professional. the POA should be notarized and apostilled if the country where it is executed is member of apostille convention https://en.wikipedia.org/wiki/Apostille_Convention if it is not the case it should be notarized and legalized with a local Italian Embassy or Consulate where the power of attorney is executed.
Directors,
a Sole Director or a Board of Directors could be appointed, generally there are no restrictions regarding their number, nationality or place of residence.
The Directors’ remuneration is fixed by Stockholders’ meeting and the Board of Directors has the power to decide on special remuneration for Directors based on their responsibilities.
What are the italian Transfer Pricing documentation regulation?
Article 110 of the Presidential Decree no. 917 of 22 December 1986:
”Components of the income statement of an enterprise derived from operations with non-resident entities that directly or indirectly control the enterprise are controlled by the enterprise or are controlled by the same corporation that itself controls the enterprise, should be valued with reference to that conditions that would be agreed between independent parties operating in conditions of free competition and comparable circumstances (…) ”
Article 26 of Law Decree no. 78 of 31 May 2010:
- Provides a penalty protection regime for companies that comply with the documentation requirements including the detailed format as set out in a Regulation dated 29 September 2010 and which notify possession of documentation when they file their tax returns.
- In cases of a TP adjustment, no administrative penalty should apply if the taxpayer has prepared documentation to support its intercompany transactions drawn up in accordance with the 29 September 2010 Regulation and had notified possession on its tax return.
Article 1, § 6 of Law Decree no. 471 of 18 December 1997:
- Documentation is not mandatory but if taxpayers prepare Italian compliant TP documentation they can claim penalty protection in the event of a TP adjustment. Otherwise ordinary penalties range between 90% and 180% of the tax assessed which could be reduced in case of an early agreement with the tax authorities.
- In order to benefit of the penalty protection in case of tax assessment, the possession of the documentation is made in the tax return (the deadline for filing a tax return is the end of the 9th month after the FY end (i.e. end of September 2019 as regards TP doc. for FY ended 31 December 2018).
How is the country file made?
- Chapter 1 :General description of the enterprise (history, recent evolution and general overview of the relevant markets of reference)
- Chapter 2 :Business Sectors General description of the specific market sub-industry and the main features characterizing the activities provided (i.e., degree of rivalry, industry concentration, category segmentation, geographical distribution, etc)
- Chapter 3 :Enterprise’s organization chart[“the paragraph contains a general overview of the role that each of the enterprise’s business units carries out within the general activity”]
- Chapter 4 :General business strategies pursued by the enterprise and potential changes compared to the previous tax year’s [the paragraph contains information regarding also specific strategies on specific sectors or markets]
- Chapter 5 :Controlled transactions (sale of tangible or intangible goods, provision of services, financial services transactions)
- Chapter 6 :Intra-group transactions (Cost Contribution Arrangement
How long does the taxpayer have to provide the documentation in the event of a tax audit?
Upon the tax auditors request, the documentation must be produced within 10 days. Taxpayers have a further 7 days to produce additional supplementary information if requested (potentially extendible in case of agreement with the tax inspectors)
What happens if the taxpayer who checked the box in the tax return does not provide the documentation within the deadlines?
If the requested information is not provided, the taxpayer will not benefit from the penalty protection regime.
The implication is that the level of penalty would be set higher in the range (90% to 180% with reductions for early settlement) than would otherwise apply