Answer ... Income tax returns must be filed by 31 October each year with reference to the previous fiscal year.
Corporate income tax (‘Imposta sul Reddito delle Società’) and regional tax on business activities (‘Imposta Regionale sulle Attività Produttive’) due based on the tax return should be paid in accordance with the following schedule:
- The balance payment due for the preceding fiscal year should be made by the last day of the sixth month following the end of such fiscal year;
- The first advance payment due for the subsequent year should be made by the deadline for the balance payment for the preceding fiscal year (ie, the last day of the sixth month following the end of such fiscal year); and
- The second advance payment due for the subsequent year should be made by the last day of the 11th month following the end of the preceding fiscal year.
Answer ... In Italy, breach of tax duties triggers the application of administrative penalties and, in specific cases, of criminal penalties.
The most common administrative penalties applicable in case of non-compliance by a corporate taxpayer are as follows:
- failure to file a tax return is punishable by the application of a penalty ranging from 120% to 240% of the taxes that were not declared;
- filing of an incorrect tax return is punishable by the application of a penalty ranging from 90% to 180% of the higher taxes; and
- failure to pay or delay in paying taxes is punishable by the application of a penalty equal to 30% of the taxes not paid or paid late.
Penalties may be reduced (according to the ‘ravvedimento operoso’ rule) if the taxpayer corrects the mistake or omission, paying taxes, interest and (reduced) penalties, before a tax assessment is carried out by the tax authorities.
As mentioned, the most serious administrative breaches may also attract criminal penalties, including imprisonment if specific thresholds are overcome. For example, this may arise in case of:
- use of false invoices (imprisonment from 18 months to six years, with no thresholds applicable);
- failure to pay declared withholding taxes or the annual advance value added tax payment (imprisonment from six months to two years); or
- offset of non-existent tax credits (imprisonment from one year and six months to six years).
Answer ... In compliance with Base Erosion and Profit Shifting Action 13, in 2017 Italy introduced a country-by-country reporting regime, based on which Italian parent companies of multinational groups with a consolidated turnover exceeding €750 million must communicate to the tax authorities, on a yearly basis, a wide range of information concerning the group (eg, tax residence of all group members, revenues, profits, taxes paid, intangibles, employees).
Italian parent companies are subject to this regime if:
- they are mandatorily required to prepare a group consolidated financial statement;
- regardless of the existence of a (higher-level) group holding company, such a (higher-level) holding company is not requested to prepare a country-by-country report in its state of residence; or
- regardless of whether such a (higher-level) holding company prepares a country-by-country report, its state of residence does not guarantee an adequate exchange of information with the Italian tax authorities.