Italy: Corporate tax changes, enacted in 2016 budget law

Corporate tax changes in Italy

The budget law for 2016 (Law n. 208 of 28 December 2015) was passed by the Italian Parliament on 22 December 2015 and published in the Italian official gazette on 30 December 2015. The budget law introduces significant changes relating to Italy’s corporate income tax, including:

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  • Reduced corporate income tax (IRES) rate, effective 2017 (reduced from 27.5% to 24% from 2017; for 2016, the IRES rate is unchanged)
  • Increased corporate income tax (IRES) rate for credit and financial institutions
  • Extended statute of limitations for value added tax (VAT) and income tax (IRES) assessments (extended from four years to five years)
  • New penalty system for noncompliance with tax rules, effective 2016
  • Changes to anti-avoidance rules relating or involving “black list” (i.e., preferential tax) jurisdictions for deductible costs and expenses,  and CFC rules
  • Country-by-country reporting
  • Measures to address international tax evasion
  • Amendments to the “patent box” regime
  • New definition of “permanent establishment” for the gaming business
  • Additional “bonus” depreciation of certain tangible assets
  • Amortization period reduced to five years for higher values of goodwill and trademarks resulting from business reorganizations
  • “Step-up” of business assets for accounting and tax purposes 

 

Read a January 2016 report [PDF 292 KB] prepared by the KPMG member firm in Italy: Budget Law for 2016

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