The Circular letter scheme that provides clarifications on the current new fiscal rules on Controlled Foreign Companies (Cfc) and a draft provision containing new criteria for determining in a simplified way the level of taxation are both available from today for a public consultation on the website of the Revenue Agency.
Consultation period - Interested parties have until August 6th, 2021 to send their comments and/or proposals for amendments or adjustments. The purpose of the consultation is to allow the Revenue Agency to evaluate the insights sent and, in case, incorporate them in the Circular letter final version.
Objective of the consultation - The Circular letter clarifies and explains the new CFC regulations currently in force. Indeed, the current set of new tax rules have been introduced to align the country’s laws to the EU’s Anti-Tax Avoidance Directive (ATAD). Particularly, Italian CFC legislation has been substantially amended by Article 4 of the Legislative Decree No. 142 of November 29 2018 or ATAD Decree. Basically, the Circular letter focuses on the following matters: as far as the subjective requirements, on CFC rules applied to Italian resident persons (including individuals) and to Italian permanent establishments (PE) of non-resident persons when the Italian resident person or PE controls a foreign entity; and on foreign entities include foreign PEs of controlled non-Italian resident persons and foreign PEs of Italian persons that apply the branch exemption regime. Regarding objective requirements, the Circular letter cover the CFC rules that target foreign entities that meet the following requirements: are controlled by an Italian person or PE (through voting rights, contractual relationship or majority of the foreign entity's profit participation rights); are subject to an effective tax rate lower than 50% of the effective tax rate that would apply if it were resident in Italy (considering that the Italian nominal corporate tax rate is 24%); and generate more than one third of their revenue from the following categories of passive income
How to submit your response - The draft Circular and the draft provision will remain in consultation until August 6th, 2021. By this date it will be possible to send evaluations and/or insights to the email address email@example.com. To ensure an efficient process of valuation of the various contributions, stakeholders should send their opinions by following, as strictly as possible, the present scheme: Topic / Paragraphs of the Circular / points of the provision concerned / Observations / Contributions. The Revenue Agency will publish the comments and contributions received on a consultation web page.