Reshoring in Italy: 50 per cent tax reduction

In order to encourage the introduction of economic activities in Italy, Article 6 of the draft legislative decree on international taxation implementing the tax delegated law, which is currently being examined by the parliamentary commissions for the required opinions, provides for a 50 per cent tax reduction for economic activities transferred to Italy previously carried out in a non-EU country.

In particular, 50 per cent of incomes coming from business activities and from arts and professions exercised in an associated form, carried out in a non-EU country, and transferred to Italy, are not considered as taxable income for IRES and IRAP tax purposes. This detaxation is valid starting from the tax period in progress at the time of the transfer and for the following five tax periods. In order to set not taxable income, accounting records must be kept separate so that the correct determination of the income and value of the net production eligible for tax relief can be verified.

However, activities carried out in Italy in the twenty-four months before transfer are not eligible for the benefit described above. Moreover, it should be considered that the legislation only considers the transfer of businesses already active in non-EU countries and does not refer to the start-up of new activities in Italy. Therefore, clarifications will be needed as to whether there is a minimum period of business activity abroad. 

Moreover, in order to be eligible for the above mentioned facilitation, the new business must be maintain in Italy for the following five years (ten in the case of large companies); otherwise, he will be required to pay the saved taxes plus interest. Recovery of the taxes saved will also take place in the event of even partial transfer of the activity, on which the tax relief was granted, outside of Italy. In this regard, an example could be a company admitted to the tax benefit upon the transfer to Italy (from a non-EU country) of its entire business activity. Whether the same company, in the five tax periods following the expiration of the regime, decides to transfer in part its activity elsewhere, relocating only a branch of the business, the recovery would involve all the taxes not paid while the regime was in force.

Finally, it should be noted that the draft decree concerning the international taxation provides for an authorization request from the European Commission.