Tax Pills

Begins the new fiscal era marked by the adoption of Synthetic Reliability Indexes. Italy’s Revenue Agency has already identified the first 70 economic activities to associate with SRIs
The Revenue Agency has tailored the first 70 new “fiscal report cards”, or Synthetic Reliability Indexes (SRIs), to replace an equivalent number of preexistent “studi di settore” applied to 1.4 million taxpayers. The new fiscal indexes will be in force in 2018. Particularly, the ad hoc provision, signed by the new Head of the Revenue Agency, Ernesto Maria Ruffini, categorizes and selects the first cluster of 70 indexes to be elaborated this year and which may already be applied starting from the 2017 tax period following a direct approval by the Ministry of Economy and Finance, while the remaining indexes (SRIs) will be identified by January 2018 and subsequently elaborated over the year, till to involve, on a regular basis, about 4 million economic operators representing the entire spectrum of taxpayers involved in the surpassed “sector studies”.
How the new fiscal report cards work - From 2018, businesses and professionals will thus have a clear view of the correctness of their tax behaviors through a new statistical and economic methodology that will establish the degree (on a scale 1 to 10) of effective and verifiable reliability to comply with tax obligations.
The taxpayers’ audience of the new Indexes, over one million - The new 70 Indexes will involve about 1.4 million taxpayers. In particular, 29 synthetic reliability indices will be developed for the trade sector. Among the activities included are retail stores in non-specialized computers’ shops, peripherals, telecommunications equipment, audio and video consumables, home appliances, sports goods, games and wholesale of furniture. Instead, 17 Indexes have been identified for the services sector, including carpenters and mechanics, hairdressers and barbers, repairing motor vehicles, motorcycles and mopeds, as well as real estate brokers, catering and tourist villages. For the manufactures the Indexes identified are 15 and concern, among others, the manufacture of travel articles, handbags, manufacture, processing and processing of glass, footwear, rubber products. For professionals, the new SRIs cover 9 different self-employment activities, including graphic designers, geometry and law firms.
The largest number of makers for macro-categories - By going through the activities of about 1.4 million taxpayers affected by the new Indexes for the 2017 tax period, which will then be able to access the expected benefits, some 168,000 are trading intermediaries (12% of the audience), nearly 145,000 attorneys (10%), over 129,000 plant installers (9%). Among the largest categories of makers affected by SRIs are restaurants, about 95,000 (7%) and hairdressers, about 74,000 (5%).
The benefits for taxpayers - Taxpayers who will be "reliable" applying the new Indexes will have access to significant fiscal rewarding benefits on multiple levels. Particularly, the exclusion of analytical-presumptive investigations and a limited application of the findings based on the synthetic determination of income. It is also envisaged that the deadline for the assessment and exemption will be reduced, within the limits set, by the issue of the compliance visa for the compensation of tax credits. A new methodology is also introduced for the clusters identification which will contemplates, in details, the reduction of number, a more stability over time and a more solid assignment of the taxpayers to the corresponding cluster. Questionnaires will be also simplify, through the reduction of the information requested. And finally, the estimation of revenues and value added per worker will be made through the utilization of a production function of the Cobb-Douglas type, in logarithmic form, which means a better economic interpretation of the estimated coefficients, elasticity, and results that are closer to the economic reality.
A more effective tool to promote compliance in Italy – In perspective, the synthetic indexes of reliability will promote compliance of the most virtuous taxpayers and will enable a better fight against those non-virtuous behaviors that distort the rules of competition and markets, while improving economic efficiency and tax system’s neutrality in accordance with the recommendations of the main international Institutions, above all, OECD and IMF.
“Studi di Settore” and new synthetic indexes of reliability comparing, or the old and the new compliance model face to face - Whilst the previous SdS system was based upon an estimation of an “adequate” level of revenues and on the consequent possibility for the Italian Tax Administration to perform presumptive controls, the new system takes into account multiple elementary indicators, which regard not only the declared revenues, but also indicators of “reliability” and “anomaly” for a given economic activity. Most important, the new system allows the most reliable taxpayers to access a reward system, which implies several advantages such as shorter deadlines for controls, exclusion from some tax controls and faster procedures for VAT reimbursements. To be clearer, the new approach intends to replace “repression” in favor of a rewarding logic based on cooperation between the Tax Administration and the taxpayers.
The aims of the new SIRs - In short, the SIR Project is aimed at allowing taxpayers to know their degree of reliability as determined by the Tax Administration. With the goal of reaching tax compliance, taxpayers can also improve or adjust their declaration. They also provide, in case of a high reliability level of the synthetic index, a diversified reward mechanism, in order to ensure a clearer and better relation between the taxpayers and the Tax Administration.

Italians working abroad: a brand-new guidebook to easily manage tax issues
For Italian citizens it is not always easy to identify which kind of taxation is applicable to incomes earned abroad.
Actually, they have to take into account multiple aspects and consider that rules may be different depending on individual situations. For example, everything changes whether or not a Convention for the avoidance of double taxation exists between Italy and the foreign Country in which the worker produces the income, if he is registered or not at the Aire, if the period of stay in a foreign Country is more or less than 183 days.
The Italian Revenue Agency has recently published on its website – - an online guidebook to allay countrymen doubts concerning the correct way to declare and pay taxes in relation to incomes earned abroad. In particular, this brand-new publication provides instructions about how to avoid double taxation, how to benefit from the tax credit for taxes already paid in a foreign Country, how and when it is necessary to register in Aire, the Registry of Italians Resident Abroad. Finally, the guidebook explains how to access to the “voluntary disclosure” procedure by 30 September 2017, to be compliance with taxes and to take advantage of the tax credit for taxes already paid out of the Country.
The worldwide taxation principle
In general, to determine where a citizen has to pay taxes on income, it is necessary to consider the concept of “residence”, according to the Worldwide Taxation Principle, on which tax systems of many European Countries, including Italy, are founded.  So, if an Italian citizen is working abroad but he is still maintaining the Italian residence, he has to pay taxes in Italy also on income earned abroad, unless International Conventions for the avoidance of double taxation contain different provisions. By the way, taxpayers can deduct taxes paid abroad from taxes paid in Italy, in the form of tax credit.
Residence for tax purposes: the 183-day rule – Under Italian Law, an individual is considered resident for tax purposes in Italy if he/she is recorded in the Italian register of resident population for more than 183 days, if he/she is domiciled or resident in Italy or if he/she has moved to a tax heaven, unless proven otherwise. This role is more or less applied in the same way in many Countries and it is an hint for Italian citizens, moving abroad, to understand if it is necessary the Aire enrolment. In particular, the registration is mandatory for citizens who take up residence in a foreign Country for more than 12 months and for citizens residing abroad either as a result of being born there or having obtained Italian citizenship for any reason whatsoever. On the other hand, enrolment in the Aire is not required for citizens who go abroad for a period of less than 12 months, for seasonal workers, for government employees posted abroad and for Italian military servicemen/women working under the auspices of Nato.
International Conventions for the avoidance of double taxation
Italy has bilateral agreements with many foreign Countries to avoid double taxation in all cases where somebody pays taxes both in the Country of income production and in the Country of residence. The Italian law provides for tax credit in relation to taxes paid abroad. In particular, double taxation is eliminated by applying the article 165 of Tuir, according to which Italian taxpayers can deduct taxes already paid in a foreign Country from the net tax that they have to pay in Italy. All the Conventions for the avoidance of double taxation, signed by the Italian Government and currently in force, are published on the Ministry of Economy and Finance website.

FiscoOggi è una pubblicazione dell'Agenzia delle Entrate - Ufficio Comunicazione
Testata registrata al Tribunale di Roma il 19.9.2001 con n. 405/2001
Direttore responsabile Claudio Borgnino