New Law: Enactment Of 2000 Budget Law Connected Tax Reform ("Tax Reform").On November 9, 2000, the Italian legislature finally passed the much anticipated Tax Reform which provides for a variety of new tax treatments affecting individuals, partnerships and corporations, whether domestic or internationally based. The above provisions involve amendments to the Income Tax Law, Value Added Tax, Inheritance and Gift Tax and other minor taxes.
The most important provisions include:
Control Foreign Corporation legislation which sets forth a presumption whereby income produced in tax havens is considered as produced in Italy for income tax purposes;
Subject to certain restrictions, the 95% income tax exemption currently provided for dividends distributed within the European Unity only will be extended to dividends distributed by non-European subsidiaries to Italian mother companies;
A decrease from 27% to 19% of the substitutive tax payable in the context of the sale of on-going concerns and control interest held for at least three financial years;
Corporate Reevaluation of tangible and intangible assets
Assimilation of income arising out of collaborations offered in a coordinated and continuous way (i.e. currently a type of self-employment income) to employment income;
New incentives for employment income generated abroad;
New tax treatment for Inheritance and Gift Tax purposes: (i) A decrease of rates and (ii) introduction of liability for "indirect donations" and "donations executed abroad by Italian donors to Italian beneficiaries."
Source: The Decree of November 9, 2000 can be found in the Law Journal Corriere Tributario of December 4, 2000 from page 3368 to 3413. Salvatore di Salvatore, Squire, Sanders & Dempsey llp, Milan
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