The document summarizes Italy's new tax compliance regime for large businesses. It outlines that companies with over €10 billion in annual revenue can join starting in 2016, and those with over €100 million can join starting in 2020. It also allows companies investing over €30 million in Italy to join regardless of revenue. Main benefits include preventative tax discussions, binding agreements, reduced penalties, and reputation/credit benefits. Requirements include having a tax control framework in place. The regime aims to attract foreign investment by providing tax certainty for qualifying large businesses and investments in Italy.

1. The new ItalianTax Compliance
Regime for Large businesses
Why investing in Italy can turn out to
be a smart deal
Graziano Gallo
www.dianomos.com

2. The NewTax Compliance Regime in pills
Who is admitted
• As from 2016 largest corporations with a turnover amounting to at least10
billion euro can gain admittance to a brand newTax Compliance Regime,
provided they fulfil some requirements
• As from 2020 also companies with a turnover amounting to at least100
million euro will be enabled to gain admittance to the same Regime,
provided they fulfil some requirements
• In the meanwhile also resident and non resident companies investing at least
30 million euro in business activities within the territory of Italy can gain
admittance to the same Regime (regardless of the turnover threshold) by
virtue of a Ruling issued on demand by the Italian Revenue Agency, defining
the way the new investment must be treated under a fiscal point of view

3. No surprise approach: the most relevant tax issues are
preventively discussed with dedicated, specialized tax officers.
Fairness first: any subsequent decision is made according to a
point of view shared between the taxpayer and the Revenue
Agency and based on a technical discussion led by impartiality
and objective criteria.
Tax audit shelter: tax issues are submitted to discussion in real
time, preventing the need of ex post audit often leading to
expensive, ineffective litigation processes of uncertain outcome.
Early certainty: the chance to solve the most relevant tax issues
before submitting the tax return gains early certainty and allows
the taxpayer to better plan its future investments.
The NewTax Compliance Regime in pills
Main benefits

4. Exclusive competence: Only the Revenue Agency specialized
Office is entitled to discuss with the taxpayer its tax position.
The tax police (Guardia di finanza) cannot any longer carry out
tax audits.
Prevention of criminal indictment: the adoption of aTax Control
Framework (which is the main requirement in order to get
admittance to the Regime) prevent the risk of indictment for
criminal offences.
Advanced binding agreement with the Revenue Agency on the
most relevant transactions and contracts: taxpayers admitted to
the Regime have the chance to undersign advanced binding
agreements with the Revenue Agency on the most relevant
transactions and contracts.
The NewTax Compliance Regime in pills
Main benefits

5. Favourable penalty regime: in case of an assessment on past FYs
penalties must not be paid until the assessment becomes
definitive and in any case they cannot be applied for an amount
exceeding the minimum set forth by the law.
No guarantees required for reimbursements: taxpayers admitted
to the Regime are not required to provide guarantees for
obtaining reimbursements.
Fast track for clarifications from the Revenue Agency on tax
issues: taxpayers admitted to the Regime are entitled to get
quick answers form the Revenue Agency on any tax issue.
The NewTax Compliance Regime in pills
Main benefits

6. Reputation enhancement: taxpayers admitted to the Regime are
listed on a specific section of the Revenue Agency Website. Such
a circumstance triggers the following further substantial benefits:
Increase of the value of the company admitted to the Regime:
the elimination of tax uncertainty produces an immediate
increase of the overall economic value of the company.
Easier and cheaper access to credit: taxpayers admitted to the
Regime can gain credit merit before the bank system and get
easier and cheaper access to bank financing.
The NewTax Compliance Regime in pills
Main benefits

7. In order to gain admittance to the NewTax Compliance Regime the taxpayer
must have in place a Tax Control Framework, i.e. an integrated effective system
of identification, measurement, control and management of the tax risks
deriving from the business activities performed.
The concept of Tax Control Framework is defined by OECD mainly in the
following two papers:
• Co-operative compliance: a framework (2013)
• Co-operativeTax Compliance: Building BetterTax Control Frameworks
(2016)
The NewTax Compliance Regime in pills
Main requirements

8. Typical Tax Control Framework components
The NewTax Compliance Regime in pills
Main requirements
Tax Strategy definition
Tax risk governance definition
Tax risk identification
Tax risk measurement
Tax risk control and management
Training
TCF Monitoring

9. Resident and non resident taxpayers investing at least 30 million euro in
business activities within the territory of Italy can gain admittance to the New
Tax Compliance Regime (regardless of the turnover threshold) by virtue of a
Ruling issued on demand by the Italian Revenue Agency, defining the way the
new investment must be treated under a fiscal point of view.
The road map towards the admittance to the NewTax Compliance Regime can
then be described as follows:
How gaining access to the Regime by investments
Investment
plan
Ruling by the Revenue
Agency
Admittance
to the Regime

10. The Investment
According to the law, the investment must:
- take place within the Italian territory;
- amount to at least 30 million euro;
- involve significant effects on the employment level;
- be of a lasting nature.
According to the law, the investment must imply one or more of the following:
- the set up of brand new business activities in Italy;
- the enlargement of business activities already in place in Italy;
- the diversification of business activities already in place in Italy;
- the restructuring of business activities already in place in Italy in order to get
out of crisis;
- operations on participations to the capital of an Italian enterprise.
How gaining access to the Regime by investments

11. The Investment
According to the law, in order to determine the amount of the investment, all
the financial resources employed must be summed even if provided by third
parties and, if the investment is made by a group, even if sourced from different
legal entities belonging to the group.
How gaining access to the Regime by investments

12. The Ruling by the Revenue Agency
According to the law, in order to obtain the Ruling by the Revenue Agency
before the investment is made, an application must be filed containing the
following mandatory elements:
a) The identification of all the legal entities participating in the investment plan;
b) A detailed description of the investment plan, included all the operations on
legal entities implied by the investment plan.The description must contain:
- The total amount of the investment and the way it has been calculated;
- The timeline of the investment and its process;
- The impact of the investment on the employment level in terms of
increase or maintenance;
- The impact of the investment on the Italian tax system;
…
How gaining access to the Regime by investments

13. The Ruling by the Revenue Agency
…
c) The tax law provisions whose application is supposed to be triggered by
the investment plan in order to have confirmation that no anti-avoidance or
anti abuse-clause is violated and that the tax regime meant to be applied is
correct;
d) All the documents needed for a better understanding of the investment
plan;
e) The signature by the legal representative of the legal entities involved or by
their professional appointed representatives.
How gaining access to the Regime by investments

14. The Ruling by the Revenue Agency
Once received, the application form and its attachments are analysed by the
competent Office of the Revenue Agency.
The Office can:
- Require additional info and docs;
- Summon one or more meetings with the investors and/or their
representatives for the procedure in order to get additional info and
clarifications;
- Carry out visit on site agreed upon with the investors.
How gaining access to the Regime by investments

15. The Ruling by the Revenue Agency
After 120 days (or 210 if additional docs are required after the application) the
Office issues its Ruling which is binding for both the Revenue Agency and the
taxpayer, under the condition that the investment plan takes place according to
what disclosed to the Office.
Should the Office remain silent beyond the deadline set by the law, the tax
treatment applicable to the investment for which the application was filed and
to every related operation is the one exposed by the applicant.
Provided that the investment is then carried out according to what represented
to the Revenue Agency, no assessment can be issued based on solution contrary
to the Ruling or to the tax treatment indicated in the application in the case the
Office has remained silent.
How gaining access to the Regime by investments

16. Admittance to the NewTax Compliance Regime
Provided that the investment is carried out according to what represented to
the Revenue Agency and that the investor complies with what stated in the
Ruling, admittance to the NewTax Compliance Regime can be legitimately
required.
If the investment consists of equity injection into the capital of an Italian
enterprise, the latter is the taxpayer entitled to be granted access to the New
Tax Compliance Regime.
How gaining access to the Regime by investments

17. Admittance to the NewTax Compliance Regime
ATypical scheme
How gaining access to the Regime by investments
Parent
company
Italian
Subsidiary
Equity/finance injection
of at least 30 million euro
Investment
tax shelter
Overall Subsidiary
tax shelter
Ruling Tax Compliance
Regime

18. Specifically shaped to attract the interest of
Investment Funds and Multinational Groups
Ruling on new investments & NewTax Compliance Regime
Are the best way to add value to your investment in Italy.
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Should you feel in need of further information and details
do not hesitate to get in touch!
graziano.gallo@dianomos.com
www.dianomos.com
Conclusions