THE BACKGROUND
The art. 167 of (TUIR) the Italian Income Tax code provided that the CFC rules would have applied only to companies resident in Black list countries.
After the two precedents version of “Scudo Fiscale” (repatriation of assets held outside Italy with no tax penalties or future assessments upon payment of a tax between 2.5% and 5% of the assets repatriated) a third version has been issued by the Italian government with the Decree Law no. 78 of 1st July 2009.
THE NEWS
The CFC rules have been broadened also to those companies situated in non-black list countries. The new decree applies to Italian individuals or companies that control directly or indirectly foreign companies in non black list jurisdictions if both the following 2 conditions are met:
1. controlled companies subject to a local tax that is less than the 50% of the taxes payable in Italy if the same would have been resident in Italy
2. controlled companies that derive more than 50% of their income holding participations, IP rights or services within the group.
The foreign company is deemed to be resident in Italy, unless evidence of genuine business activity carried out in the local market is provided.
The foreign company can be exempted by the CFC rule if it is situated in a non black list country and a Tax ruling is submitted.
A substitute tax of 5% will apply on the assets held up until the 31 December 2008 or repatriated and regularised from the 15 October 2009 until the 15 April 2010.
A tax of 50% per year including interests and tax penalties will be calculated on a deemed gross return of 2% per year for the 5 years prior the repatriation or the regularisation.
No disclosure of names the tax payers will be assured that will fix their position without to be disclosed their details in their disfavour.
No tax assessment for the next 2 years.
Higher Tax penalties, but not expropriations, the tax penalties for not submitting the tax return on the asset held abroad will vary between 10 and 50%, but there will not be expropriations.
