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Tax Pills

  • Taxed in Italy the interests received by foreign banks on loans to Italian residents


    The tax will also benefit from the most favorable fiscal treatment of 12.5%, in line with the art 11 of the fiscal Convention signed between Italy and Switzerland. All this comes from a tax ruling recently issued by the Italian Revenue Agency in response to an application submitted by a Swiss bank concerning the tax treatment of interest payments made to the bank by Italian individuals. Particularly, this last Financial Administration response on the taxation in Italy of the interest received by a non-resident on financial loans granted to Italian residents is to be considered a further confirmation of a new orientation that is being consolidated. In fact, the Agency confirms the obligation of domestic taxation of interest income received by Swiss banks and paid by Italian residents due to the application of national fiscal rules, yet in doing so it considers as relevant the residence of the individual who paid the interests, without considering any connection with the place where the activity that generated the income was carried out.
    Taxation of interest paid by Italian individuals to foreign banks
    The general rule under Italian tax law is that foreigners are taxed in Italy only on Italian-source income and that capital incomes, such as interests, are considered to be Italian-source income if are paid by an Italian tax resident. Essentially, the last tax ruling, no. 379 of 11 September 2019, substantially confirms and clarifies the position of the tax authorities. Particularly, it clarifies that the withholding tax rate of 12.5% applies with regard to interest payments made by Italian individuals on loans from a Swiss bank. That’s because the Italy-Switzerland income tax treaty provides for a reduced rate of 12.5% if the recipient of the interest is the effective beneficial owner.
    The obligation for the bank to complete and submit a corporate tax return in Italy
    Also, the tax ruling indicates that the Swiss bank must then file an Italian corporate income tax return. Indeed, in relation to interests paid by someone who is not a withholding agent, for instance, an individual, the tax must be applied, according to Italian fiscal rules, through the submission of a corporate income tax return by the foreign entity, in this case a Swiss bank. In the years at issue, the rate of corporate income tax in Italy was 27.5%. Yet, thanks to the Italy-Switzerland income tax treaty provisions, the bank will pay a reduced rate of 12.5%, provided that the recipient of the interest was the effective beneficial owner. That said, it’s important to stressed that if foreign banks that have made loans to Italian tax residents than failed to file a corporate income tax return in Italy to declare the income derived from the loans, well in this case may encounter certain risks including interest and penalties on top of the tax due.
    Fiscal treaties and conventions need to be always evaluated
    Furthermore, is also useful to pointed out that the domestic regulations must be harmonized each time with the provisions of any international agreements concluded with Italy. In any case, the Revenue concludes that the exercise of a business activity in the Italian territory constitutes a de facto condition that cannot be evaluated in the ruling and, therefore, it remains in the faculty of the Financial Administration to eventually verify the correctness of what reported from the applicant.

    Stefano Latini

  • Sale of goods online. Set the rules for sending data to the Italian Revenue Agency. The first communications due by October 31

    immagine generica illustrativa

    All taxable persons, whether or not they are residents of Italy, who managing an electronic interface, ie virtual markets (marketplaces), digital platforms, portals or similar devices, facilitate remote sales of goods already within the European Union or of imported goods, are now required to transmit to the Revenue Agency, for each quarter, a specific communication with the data of the suppliers of the assets that have made at least one sale in the reference quarter. This new fiscal fulfillment has been fixed through an in depth implementing provision, signed by the Director of the Agency, that sets the terms and procedures for sending this communication, according to article 13 of the law-decree of 30 April 2019 n.34, also known as "growth decree".

    Transmission of supplier data - The subjects obliged to communicate data relating to online sales, for each supplier of the goods sold through platforms and/or portals, must send the following data to the Agency on a quarterly basis: the name or complete personal data, including the 'unique identifier used to carry out sales, residence or domicile, tax identification number where existing, and e-mail address; the total number of units sold in Italy; at the choice of the taxable person, for units sold in Italy the total amount of sales prices or the average selling price, expressed in euros.

    Transmission procedures - Data are transmitted via two telematics services, Entratel/Fisconline, managed by the Revenue Agency. In particular, to send the data must be used the specific control software products that will be made available free of charge by the Agency. For the transmission of data, the interested parties may in any case make use of intermediaries. Non-resident subjects, without a permanent establishment in Italy, will required to identify themselves directly or through a tax representative residing in the State.

    First deadline October 31, 2019 - The transmission of data is done by the end of the month following each quarter. However, upon first application, the first submission must be made by 31 October 2019. Particularly, the 31 October 2019 deadline applies for remote sales of any type of goods, regardless of their unit value, made in the second and third quarters (Q2 and Q3) of 2019 and for remote sales of electronic goods (e.g., mobile phones, video game consoles, tablet PCs, and laptops) and also for remote sales of imported electronic goods not exceeding €160 made in the period from 13 February 2019 to 30 April 2019. As said, in general, the reports will be due on a quarterly basis by the end of the month following the quarter in which the sales were made (for example, reporting for the fourth quarter 2020 will be due by 31 January 2021).

    In the event of non-delivery or incomplete data - Noncompliance with these measures can result in the taxable person being liable itself for the VAT. A failure to transmit the required information by the deadline or providing incorrect or incomplete data will be treated as if the taxable person received and supplied the goods itself, and thus the taxable person will be liable for VAT on supplies of goods for which it failed to send (or for which it sent incomplete information) unless the taxable person can prove that VAT was paid by the supplier or, in the case of incomplete information, can demonstrate that it did not and could not have reasonably known that this information was incorrect.

    Use, treatment and security of data - The information received by the Tax Registry through the Agency's electronic channels are used to control and monitor the turnover of remote sales, goods imported or already present within the European Union, made through electronic interfaces, that is, portals or digital platforms. All with respect for the privacy-rights of taxpayers. In this regard, the processing of the data acquired will be reserved exclusively for the operators in charge of the controls, whose operations are tracked. The security in data transmission is guaranteed by the sending channel of the information system of the tax registry, thanks to the adoption of the measures related to the control of access to the system and the encryption of the transmission channel and the data. Finally, we remind you that the information will be kept until December 31st of the tenth year following the sending of the communication.

    Stefano Latini