LAST DAYS TO TAKE A DECISION ON THE TAX AGREEMENT

1. PROPOSAL FROM TAX OFFICE FOR INCOME TAXABLE ON FISCAL YEAR 2024 AND 2025

Italian Government rules the opportunity to send a proposal with the aim to reach an “agreement”, called “CPB”, between the Italian Tax Office and Taxpayers, and the latter shall be able to freeze, for two fiscal years (at the present on 2024 and 2025, and then on biennial basis), the income taxable related to Government and Regional taxes. The proposal does not impact on VAT.

The key points of the new opportunity are:

1.1 Who does the new compliance institute looks to?

The involved taxpayers are those who are required to apply the Synthetic Indices of Tax Reliability (ISA) and have revenues not over Euro 5.164.569 and conduct a business under a specific NACE code (in Italian ATECO code) for which is necessary to fill, yearly, the ISA.

1.2 Pre-conditions to access the CPB

Requirements for taxpayers seeking to take part in the CPB are:

• Be subject to ISA fulfilment;
• Absence of tax debts in the period leading up to when the proposal is placed (31^st December 2023);
• Correct submission of tax returns;
• Absence of tax crime, for false corporate communications, for money laundering or for illicit use of money or assets, as well self-instigated money laundering.

1.3 How the CPB works

Tax Office provides a proposal to the Taxpayer on the basis of the income taxable 2023 and ISA fulfilment.

If the taxpayer accepts the proposal, it agrees to declare the amounts agreed upon for the two fiscal years (2024/2025) periods covered by the arrangement. Furthermore, the higher income taxable respect to the income of 2023 will be subject to a flat tax (from 10% to 15%) instead of ordinary Government tax rate 24%, while the income over the amount proposed will not be subject to taxation, without any limit. The regional tax rate remains 3,9% (or different rate on the basis of the region) and applied on income taxable proposed by Tax Office.

The agreement is accepted with a specific section of the annual Government Tax Return which will be submitted (for Entities with the calendar year) within the 31^st of October 2024.

1.4 Main advantages

• Reduction of the risk of tax audit for the years subject to the agreement;
• Taxes blocked even in the event of an increase in profits in the year subject to the agreement
• Exemption from the VAT Audit (in Italian “Visto di Conformità”) for the compensation of credits dealing with amounts not exceeding €70,000 for VAT and €50,000 for direct taxes and IRAP;
• Exemption from the VAT Audit (in Italian “Visto di Conformità”) for the reimbursement of VAT credits dealing with amounts not exceeding €70,000;
• The advance in the deadline by at least one year for assessment audit;
• Opportunity to apply the new “ravvedimento speciale” (a sort of amnesty for the years 2018 to 2022 (see the specific paragraph below).

1.5 What happen after the two-year period

Upon the end of the two-year period covered by the agreement, assuming the taxpayer continues to respect the necessary requirements to gain access the CPB, the Tax Office may formulate a new agreement proposal dealing with the ensuing two-year period, which the taxpayer may once again adhere to.

2. RAVVEDIMENTO SPECIALE (AMnesty opportunity) for the years 2018 to 2022

Italian Government, recently, introduced the opportunity for a penalty remission regime, applicable to taxpayers subject to ISA and opt for the CPB within 31.10.2024.
In particular, by paying a substitute tax, the following will be inhibited adjustments to business or self-employment income and for the years 2018, 2019, 2020, 2021, and 2022 or some of them.

2.1 TAXABLE BASE

The determination of the taxable base is calculated according to the relevant ISA rating, as indicated in the following table.

 2.2 TAX RATES

The substitute tax rate for income taxes and related surcharges also depends on the ISA rating. Specifically, for each tax year, the taxable base as determined above is subject to a variable tax rate based on the criteria indicated in the following tables.

Substitute tax on income taxes and related surcharges

 Substitute tax on IRAP

The reduced rates for tax years 2020 and 2021 take into account the effects of the COVID-19 pandemic.

2.3 MINIMUM AMOUNT

The total amount of the substitute tax on income taxes and related surcharges to be paid for each year cannot be less than €1,000.00.

2.4 PAYMENT DEADLINES

The substitute tax for each year must be paid:

• By 31.3.2025, in a single payment;
• Starting from 31.3.2025, through instalment payments in up to 24 monthly instalments of equal amounts, with interest calculated at the legal rate.

In the case of instalment payments, the remission is finalized with the payment of all instalments.

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