Italian Tax Authorities clarify the boundaries of the in-bound workers regime.
Employee bonuses must be taxed taking into account the vesting period’s years.
Permanent establishments of foreign banks may act as Italian withholding agents.
Anti-hybrids documentation to be communicated through the tax return.
Two-year time limit to claim the refund of excess VAT payments.
Form to communicate VAT exemption regime data approved.
VAT regulations on digital economy officially published.
Even indirect forms of taxation infringe the Parent-Subsidiary Directive.
Italian IRAP on dividends might be in breach of Parent-Subsidiary Directive.
DAC 9 on Pillar Two compliance reporting duties has been agreed upon.
Italian Tax Authorities clarify the boundaries of the in-bound workers regime
The ruling replies no. 71 and 74 of 12 March 2025 provide some clarifications on the concept of “high qualification or specialization” referred to into Art. 5(1)d) of the Legislative Decree 209/2023 in connection to the in-bound workers regime.
According to the Italian Tax Authorities, such requirement should be considered to be met even if the relevant person does not have a degree but have achieved years of professional experience in a specific business sector.
Ruling reply no. 72 of 12 March 2025, on the other hand, addresses the rules on the “enhanced” period of previous foreign residence of six or seven years (instead of the ordinary three) if the person who transferred his/her residence to Italy works for the same employer he/she was working for abroad. The ruling clarified that the enhanced period of foreign residence also applies with respect to self-employed persons and even if such persons work for several clients. Finally, ruling reply no. 70 of 12 March 2025 confirms that a foreign citizen who transfers his/her residence to Italy for the first time, in order to work therein, may benefit from the inbound workers regime.
Employee bonuses must be taxed taking into account the vesting period’s years
The Italian Tax Authorities, with ruling no. 81 of 25 March 2025, clarified that cash bonuses paid in connection with cross-border employee activities, although being deferred remunerations, are subject to tax in Italy on a cash-basis (i.e. when they are received by the relevant employee). Furthermore, considering that such income falls within the scope of Art. 15 of the tax treaty concluded between Italy and the United Kingdom, if during the vesting period the relevant employee carried out his/her activity abroad and was resident in the State where he/she carried out such activity, the part of the bonus which was vested that in that timeframe should be taxed only in that State, even if it was paid when the beneficiary had already become an Italian tax resident.
Permanent establishments of foreign banks may act as Italian withholding agents
The ruling no. 75 of 14 March 2025 confirms that the permanent establishment of a non-resident (Luxembourg) bank, appointed to assume the role of withholding agent, can apply the administered or managed savings regime pursuant to Art. 6 or 7 of Legislative Decree 461/97 even if the securities are deposited with the foreign parent company.
In addition, the permanent establishment is required to apply stamp duty, so customers are exempt from the application of IVAFE. The clients shall not fill the RW form with respect to the income for which the permanent establishment acts as withholding agent.
Anti-hybrids documentation to be communicated through the tax return
With the FAQ published on 31 March 2025, the Italian Tax Authorities clarified that companies that have prepared the relevant documentation for the penalty protection regime in connection with the anti-hybrid measures regulation must communicate so to the Italian Tax Authorities by flagging the box named “Particular fact patterns “ in the 2024 tax return and inserting the proper identification code.
This applies both:
• where the anti-hybrid documentation is prepared only for fiscal year 2024; and
• where the anti-hybrid documentation is prepared only for fiscal years 2020 to 2023 pursuant to the specific transitional regime provided for by the relevant provision.
Two-year time limit to claim the refund of excess VAT payments
The Italian Supreme Court, with its decision no. 6756 of 14 March 2025, stated that, in the case of distance selling activities which are relevant for VAT purposes in another
Member State, for which the relevant VAT has been erroneously paid twice (in Italy and in the other relevant Member State) the request for refund, pursuant to Art. 11-quater of Law Decree no. 35/2005 had to be submitted within two years from the date of payment in the foreign State.
Form to communicate VAT exemption regime data approved
With the ordinance no 155649 of 28 March 2025, the Italian Tax Authorities has approved the quarterly reporting model to be used by VAT-persons in Italy eligible to apply the cross-border VAT exemption regime in one or more Member States of the European Union. The form must be submitted electronically (directly by the taxpayer or by an authorized intermediary) within the last day of the month following the relevant quarter.
Form A contains:
• the total value of the supplies of goods and/or provision of services carried out during the quarter in the territory of the State;
• the total value of supplies of goods and/or provision of services carried out during the quarter in each of the other Member States (including those other than the EU countries in which the exemption was granted).
Activities related to intra-EU supplies must be checked to assess the existence of a permanent establishments
In ruling no. 64 of 4 March 2025, the Italian Tax Authorities stated that the existence of a permanent establishment for VAT purposes must also be assessed with reference to intra-EU supply of goods, even by verifying the actual intervention of the persons operating in Italy. However, in the case examined in the ruling, the activities carried out by an employee located in Italy for the development of the head-office’s business in Italy was considered to be irrelevant.
VAT regulations on digital economy officially published
The directive and regulations that are part of the so-called “ViDA package” (VAT in the Digital Age), i.e. the set of measures aimed at adapting VAT rules to the digital age, were published in the Official Journal of the European Union on 25 March 2025.
Specifically, the piece of legislation referred to above are:
• Directive 2025/516/EU (amending Directive
2006/112/EC), concerning VAT rules for the digital age;
• EU Regulation No. 517/2025 (amending EU Reg. 904/2010), which contains administrative cooperation agreements for VAT purposes;
• EU Implementing Regulation No. 518/2025 (amending EU Reg. No. 282/2011), relating to reporting obligations with reference to certain VAT regimes.
Even indirect forms of taxation infringe the Parent-Subsidiary Directive
According to decision no. C-135/24 of 13 March 2025 issued by the European Court of Justice, the legislation of a Member States which provides any form of taxation, even indirect, on intra-EU is in breach of Art. 4 of Parent-Subsidiary Directive.
The decision deals with the Belgian legislation in force in 2020 pursuant to which:
• in general, dividends, instead of being excluded tout court from the taxable base of the recipient, are first included and then deducted (inclusion-deduction system), and if the deductible amount is higher than the company’s taxable amount, the excess is carried forward to subsequent fiscal years;
• if, however, the recipient is part of a tax unit, the deduction cannot offset the taxable income recorded by other companies which are part of the tax unit.
Italian IRAP on dividends might be in breach of Parent-Subsidiary Directive
According to the opinion of the Advocate General of the of the European Court of Justice in the Joined Cases C-92/24 to C-94/24, Art. 6(1) of Legislative Decree 446/97, might infringe European law. According to such provisions 50% of the dividends received by banks and other financial intermediaries are subject to IRAP.
The rule might be in breach of Art. 4 of Parent-Subsidiary Directive, which prohibits the levy on dividends in the State of the parent company. Such violation, however, might be upheld only if IRAP qualifies as an income tax, as such falling within the scope of the directive. Nonetheless, such classification is a matter for the Italian national court to be decided.
DAC 9 on Pillar Two compliance reporting duties has been agreed upon
On 11 March 2025, the Council of the European Union announced that it had reached a political agreement on the proposal for a directive COM(2024) 497 final (DAC 9), aimed at strengthening cooperation for the exchange of information in connection with Pillar Two reporting duties.
To this end, the directive allows for groups located also in Europe to file only one Global Information Returns (GIR). The automatic exchange of GIRs between the administrations of the Member States that have taxing rights pursuant to the provisions on the global minimum tax will render such simplified filing possible. Member States are required to transpose DAC 9 measures within 31 December 2025.
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