It is under consultation until 1 October 2023, the Italian draft legislative decree that will implement Directive 2022/2523/EU for the introduction of the so-called "global minimum tax" (in line with the OECD's Pillar 2 provisions) applicable to group companies belonging to MNEs or domestic. The rules contained in the document should be implemented by 31 December 2023 and will enter into force as of 1 January 2024.
The reform process of international tax rules was initiated in 2013 by the OECD and the G20 countries under the BEPS Project (Base Erosion and Profit Shifting). The objective of those initiatives was to fill key gaps in domestic and international regulations and eliminate asymmetries generated by the interaction of individual tax systems.
After many years of discussions and negotiations, during the 2021 Italian G20 Summit 137 jurisdictions signed and approved the political agreement on the core elements of the two Pillars of the reform:
(i) Pillar 1: Revision of the profit allocation rules of the largest and most profitable MNEs;
(ii) Pillar 2: Rules to introduce an effective minimum taxation of large MNEs at a global level ("Global Minimum Tax") equal to at least 15% thereof revenues generated in each country in which these companies operate.
Directive 2022/2523/EU implemented in the EU the rules developed under Pillar 2; it essentially follows the contents published by the OECD, although introducing some provisions necessary to ensure the conformity of the new rules with the EU Treaties and the case law of the Court of Justice.
The Directive entered into force on 23 December 2022 and that, as mentioned, has the deadline for implementation in each Member State on 31 December 2023. Accordingly, Italy has prepared a draft legislative decree, now in public consultation, with the aim of implementing legislation strictly adhering to the Directive (forwarding to secondary legislation for application aspects).
The draft legislative decree, which can be found on the website of the Italian Department of Finance, consists of 52 articles divided into nine chapters. It provides for the introduction of three taxes to ensure the effective tax rate indicated by the OECD (15%) as the minimum levy:
(i) a minimum supplementary tax, payable by the Italian parent company if the subsidiary established in a foreign country is subject to lower taxation;
(ii) a supplementary minimum tax, payable by the Italian subsidiary if the parent company is resident in a country that is not a party to Pillar 2;
(iii) a national minimum tax, payable in relation to companies of a group (multinational or domestic) subject to low taxation located in Italy.
The companies affected by the Global Minimum Tax will be those belonging to MNE groups with a consolidated turnover of no less than EUR 750 million in at least two of the previous four financial years, as well as those belonging to wholly domestic groups with a turnover of no less than 750€ million. Excluded taxpayers are investment funds, real estate investment vehicles, not-for-profit entities and state agencies, international shipping and international organisations.
Originally Published by 29 September 2023
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