Law & Numbers - News Tax, Switzerland

some recent changes in the Italian Fiscal System

10.04.2017

1) Sole Entrepreneurs and Partnerships can now be taxed in the same way as Corporations Instead of being taxed at the personal rate of their title holder or their members (according to the principle of fiscal transparency), Sole Entrepreneurs and Partnerships can be subject to the same rate as the Corporations of 24%, up until the point of distribution of dividends. It is provided that a substitute tax of 24% (the same rate as predicted by IRES for Corporations, which in 2017 decreases from 27.5% to 24%) be paid in relation to such income in place of gradual IRPEF taxation. However, not all company income will be taxed at 24%: when such income is withdrawn (by the members of the Partnerships or by the title holder of the Sole Entrepreneur), it will be subject to normal, gradual IRPEF taxation. In other words, the profits kept inside of the company/sole entrepreneurship will be taxed at 24%, whilst the personal use of profits will lead to normal taxation. This change aims to bring about two goals: i. incentivise an increase in net worth through an internal reinvestment of profits in small and medium companies, for the end goal of aiding the financial stability and growth of production; ii. introduce uniform treatment with Corporations, making the legal form of taxation system more neutral. From 2017, the choice between a Partnership and a Corporation will become, if not equivalent, certainly less distorted, at least regarding taxes. It is necessary to have ordinary bookkeeping and to opt in for this regime (in the Tax Return), which is binding for five years. 2) A reduction of the terms for the emission of credit notes of a decrease in invoice, subject to IVA The emission of credit notes of a decrease in invoice will be permissible only if: i. there has been a verified case of invalidity, annulment, revocation, resolution, rescission (and similar) of the operation; ii. there has been an application of contractually predicted discounts; iii. the cessionary or client has been subject to bankruptcy proceedings (failure, arranged budget, forced administrative settlement, extraordinary administration) or to other procedures for the resolution of the company’s crisis with the aim of the restoration of debits; iv. individual executive procedure for the recovery of the credit relative to the invoice, which has remained unsuccessful. In the case of the above scenario iii, the possibility to deduct the IVA relative to the decrease in invoice can occur only once the said procedures have been concluded without success. 3) Introduction of the obligation to communicate via web and on a quarterly basis the information regarding invoices which are sent, received, and registered The data transmitted must be analytical in form (it will not be possible to send aggregate data) and in a way that, even though established in a designated Directorial Provision, it will provide: i. identification of those involved in the operations; ii. the date and number of the invoice; iii. taxable amount; iv. the applied rate; v. the tax; vi. the type of operation. 4) New accounting rules for those with a regime of simplified bookkeeping For small companies (400,000 Euro for those in the service industry and 700,000 Euro for others) who use a regime of simplified bookkeeping, the principle “deferred capital gains tax” is substituted with the mixed principle of “deferred and un-deferred capital gains tax”. From 2017 onwards, this will constitute the “naturally” applicable regime, and it requests evidence of intakes and payments. Taking advantage of a specific option (provided in Art. 5 s.5, D.P.R. 600/1973), which is binding for almost a triennium, those interested can give significance at the time of “registration” of documents, instead of at the time of intakes and payments, thusly maintaining a similar (but not identical) situation to the one previously founded on the principle of competence. For those who instead consider it convenient to remain with the principle “deferred capital gains tax” for the determination of their profits, the only possibility left for them is to use ordinary bookkeeping. Ambrogio Novelli (Studio Legale Novelli-Genoa)

1) Sole Entrepreneurs and Partnerships can now be taxed in the same way as Corporations

Instead of being taxed at the personal rate of their title holder or their members (according to the principle of fiscal transparency), Sole Entrepreneurs and Partnerships can be subject to the same rate as the Corporations of 24%, up until the point of distribution of dividends.

It is provided that a substitute tax of 24% (the same rate as predicted by IRES for Corporations, which in 2017 decreases from 27.5% to 24%) be paid in relation to such income in place of gradual IRPEF taxation.

However, not all company income will be taxed at 24%: when such income is withdrawn (by the members of the Partnerships or by the title holder of the Sole Entrepreneur), it will be subject to normal, gradual IRPEF taxation.

In other words, the profits kept inside of the company/sole entrepreneurship will be taxed at 24%, whilst the personal use of profits will lead to normal taxation.

This change aims to bring about two goals:

i. incentivise an increase in net worth through an internal reinvestment of profits in small and medium companies, for the end goal of aiding the financial stability and growth of production;
ii. introduce uniform treatment with Corporations, making the legal form of taxation system more neutral. From 2017, the choice between a Partnership and a Corporation will become, if not equivalent, certainly less distorted, at least regarding taxes.

It is necessary to have ordinary bookkeeping and to opt in for this regime (in the Tax Return), which is binding for five years.

2) A reduction of the terms for the emission of credit notes of a decrease in invoice, subject to IVA

The emission of credit notes of a decrease in invoice will be permissible only if:

i. there has been a verified case of invalidity, annulment, revocation, resolution, rescission (and similar) of the operation;
ii. there has been an application of contractually predicted discounts;
iii. the cessionary or client has been subject to bankruptcy proceedings (failure, arranged budget, forced administrative settlement, extraordinary administration) or to other procedures for the resolution of the company’s crisis with the aim of the restoration of debits;
iv. individual executive procedure for the recovery of the credit relative to the invoice, which has remained unsuccessful.

In the case of the above scenario iii, the possibility to deduct the IVA relative to the decrease in invoice can occur only once the said procedures have been concluded without success.

3) Introduction of the obligation to communicate via web and on a quarterly basis the information regarding invoices which are sent, received, and registered

The data transmitted must be analytical in form (it will not be possible to send aggregate data) and in a way that, even though established in a designated Directorial Provision, it will provide:
i. identification of those involved in the operations;
ii. the date and number of the invoice;
iii. taxable amount;
iv. the applied rate;
v. the tax;
vi. the type of operation.

4) New accounting rules for those with a regime of simplified bookkeeping


For small companies (400,000 Euro for those in the service industry and 700,000 Euro for others) who use a regime of simplified bookkeeping, the principle “deferred capital gains tax” is substituted with the mixed principle of “deferred and un-deferred capital gains tax”. From 2017 onwards, this will constitute the “naturally” applicable regime, and it requests evidence of intakes and payments.

Taking advantage of a specific option (provided in Art. 5 s.5, D.P.R. 600/1973), which is binding for almost a triennium, those interested can give significance at the time of “registration” of documents, instead of at the time of intakes and payments, thusly maintaining a similar (but not identical) situation to the one previously founded on the principle of competence.

For those who instead consider it convenient to remain with the principle “deferred capital gains tax” for the determination of their profits, the only possibility left for them is to use ordinary bookkeeping.

Ambrogio Novelli (Studio Legale Novelli - Genova)





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