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Results: 4 Answers
Corporate Tax
1.
Basic framework
1.1
Is there a single tax regime or is the regime multi-level (eg, federal, state, city)?
 
Italy
In Italy, corporate profits are generally taxed at both state and regional level, being subject to corporate income tax (‘Imposta sul Reddito delle Società’ (IRES)) and to regional tax on business activities (‘Imposta Regionale sulle Attività Produttive’ (IRAP)).

For more information about this answer please contact: Guido Lenzi from Puri Bracco Lenzi e Associati
1.2
What taxes (and rates) apply to corporate entities which are tax resident in your jurisdiction?
 
Italy
The ordinary IRES rate is 24%; a higher rate of 27.5% applies to certain banks and financial institutions. Furthermore, if a company qualifies as a ‘non-operating company’ (‘società di comodo’), the ordinary IRES rate is increased to 34.5%.

The ordinary IRAP rate is 3.9%, but may be increased or reduced by specific regional tax laws based on the business carried out by the taxpayer.

For more information about this answer please contact: Guido Lenzi from Puri Bracco Lenzi e Associati
1.3
Is taxation based on revenue, profits, specific trade income, deemed profits or some other tax base?
 
Italy
IRES and IRAP are levied on different taxable bases:

  • For IRES taxation purposes, the net profit/loss resulting from the official financial statement of the taxpayer is adjusted according to several tax rules provided by the IRES Law; and
  • The IRAP taxable base is determined based on earnings before interest and taxes resulting from the official financial statement of the taxpayer, adjusted taking into consideration specific tax adjustments provided for by the IRAP Law with the purpose of excluding or limiting the deduction of labour costs, depreciation and provisions/accruals.
For more information about this answer please contact: Guido Lenzi from Puri Bracco Lenzi e Associati
1.4
Is there a different treatment based on the nature of the taxable income (eg, gains on assets as opposed to trading income or dividend income)?
 
Italy
In principle, income earned by a corporate entity (and assimilated taxpayers) is qualified as business profits and included in the IRES and IRAP taxable bases, notwithstanding the nature of such income (eg, trading income, dividends, capital gains).

However, some specific rules may apply, depending on the nature of such taxable income. For example, for IRES purposes:

  • capital gains/losses on shareholdings become tax relevant upon realisation and, if specific requirements are met (according to the Italian participation exemption rule – see question 3.1), are respectively 95% exempt or 100% not deductible; and
  • dividends become tax relevant upon realisation and are 95% exempt from taxation.
For more information about this answer please contact: Guido Lenzi from Puri Bracco Lenzi e Associati
1.5
Is the regime a worldwide or territorial regime, or a mixture?
 
Italy
Italian resident companies are subject to IRES on their worldwide income, including profits realised abroad through local branches, and to IRAP only on business profits realised in each single Italian region.

Non-resident taxpayers are subject to taxation only as concerns profits realised in the Italian territory.

For more information about this answer please contact: Guido Lenzi from Puri Bracco Lenzi e Associati
1.6
Can losses be utilised and/or carried forward for tax purposes, and must these all be intra-jurisdiction (ie, foreign losses cannot be utilised domestically and vice versa)?
 
Italy
As a general rule, tax losses suffered during the first three years of business activity can be carried forward without limitation, while losses suffered in subsequent years can be used to offset future IRES profits up to a limit of 80% of the amount of losses each year.

According to the worldwide taxation principle, tax losses suffered abroad (ie, through a foreign branch of an Italian resident company) can be used to offset domestic taxable profits (if any).

For more information about this answer please contact: Guido Lenzi from Puri Bracco Lenzi e Associati
1.7
Is there a concept of beneficial ownership of taxable income or is it only the named or legal owner of the income that is taxed?
 
Italy
As a general rule, the recipient/legal owner of income is subject to taxation. However, the concept of beneficial ownership may assume relevance in Italy where a double tax treaty applies or due to anti-abuse provisions (eg, controlled foreign company rules; anti-abuse provisions concerning tax residence).

For more information about this answer please contact: Guido Lenzi from Puri Bracco Lenzi e Associati
1.8
Do the rates change depending on the income or balance-sheet size of the taxpayer?
 
Italy
In principle, the IRES and IRAP rates do not change depending on either the nature of the income or the size of the taxpayer.

For more information about this answer please contact: Guido Lenzi from Puri Bracco Lenzi e Associati
1.9
Are entities other than companies subject to corporate taxes (eg, partnerships or trusts)?
 
Italy
For corporate taxation purposes, entities established as cooperative companies, public and private bodies different from corporates, trusts and so on whose principal purpose is the carrying out of business activities are equated to corporates.

For more information about this answer please contact: Guido Lenzi from Puri Bracco Lenzi e Associati