On 22 December 2015 the Italian Parliament approved the
Stability Law for 2016, which was published in the Official Journal
of 31 December 2015.
The Stability Law has revised the relevant provisions of
Italy's tax code relating to so-called 'black lists' on
corporate taxation and Controlled Foreign Companies (CFC) rules. Of
particular note, the 'black lists' on (a) the deductibility
of costs and (b) CFCs have been abolished as of 1 January 2016.
This means that Guernsey will not be listed on any Italian
'black list' from 1 January 2016.
As from 1 January 2016, the only general criterion for the
application of Italy's CFC rules will be the low level of
corporate taxation of the CFC. A rate of 50% lower than the Italian
corporate tax rate (which is 27.5% for 2016 and will be 24% for
2017 onwards) is considered as a low level of taxation, both for
general and special regime. This will mean that the CFC provisions
will continue to apply as they will to all jurisdictions who meet
the low level of taxation criteria but there will be no listing of
these jurisdictions. The Italian authorities are informing the EU
Commission of these changes and this should mean that Italy is not
included among the Member States that are said to have a 'black
In addition, in early 2016, via a Ministerial Decree,
Italy's 'white lists' for the purposes of tax treatment
of interest from government bonds and listed companies will be
updated, taking into account the agreements on exchange of
information, compliant with the international standards, that have
entered into force. As Guernsey has a legal instrument in force
allowing for the exchange of information with Italy, Guernsey will
be included on the 'white list'.
The Guernsey and Jersey authorities together have made
representations to the Italian authorities on a number of
occasions, expressing the view that given the level of cooperation
extended on tax information exchange both on request and
automatically there was no justification for their being black
listed. The changes now announced by the Italian authorities are
therefore warmly welcomed.
Observing a recent discussion between the children of a successful entrepreneur, I was reminded once again of the potential impact of family members being provided with differing information about the family enterprise.
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