Law no. 208 of December 28, 2015 (the so-called "2016 Stability Law") introduced some relevant tax news; the most important are the following tax changes:

Reduction of the IRES tax rate

2016 Stability Law modified article 77, paragraph 1, of the Italian Tax Code (hereafter "ITC") reducing:

the corporate income tax rate ("IRES") from 27,5% to 24% and

the Withholding Tax rate from 1,375% to 1,20% on dividends paid by Italian entities to European Union, Norwegian and Icelandic entities.

These amendments will be effective from January 1st, 2017.

Super-depreciation

A super-depreciation regime has been introduced providing the possibility, for a taxpayer that invests in certain tangible assets, to benefit from a 40% increase of the acquisition cost.

For example:

Click here to view table.

The super-depreciation regime can apply to:

  • individuals running business, artistic and professional activities;
  • companies.

The super-depreciation regime is not applicable in case of intangibles, pre-used assets and real estate. Taxpayers can benefit from the super-depreciation for tangible assets purchased starting from October 15, 2015 up to December 31, 2016.

Black list costs

The Black list costs regime has been abrogated, amending article 110, paragraph 10, 11, 12 and 12 bis, of ITC.

Up to 2015, expenses and other negative items deriving from operations enacted with companies resident in Black List Countries were not deductible, unless the Italian taxpayer provides evidence that:

  1. the non-resident companies carry out a de facto business activities, or, alternatively,
  2. the operations enacted by means of the non-resident companies correspond to a de facto business interest, which have, in actual fact, been executed.

From January 1st, 2016, black list costs are subject to the same rules as the costs deriving from transactions with white-list companies and, therefore, no particular restrictions about their deductibility are now in place. Moreover, the black list costs will no longer be shown separately in the tax return.

Controlled foreign company regime

2016 Stability Law also modified Controlled foreign company regime (hereafter "CFC"), as provided for by article 167 of ITC.

In particular, the requirements to include that a foreign subsidiary is subject to the CFC rules have been amended:

  1. up to now, the CFC was applicable automatically if the foreign company was based in black list countries (unless contrary proof was rendered);
  2. starting from January 1st, 2016, the CFC applies only if the foreign subsidiary is subject, in the foreign country, to a tax rate lower than 50% of the rate applicable in Italy.

Country by country reporting

It is mandatory for Italian multinational holding companies, having a group turnover higher than Euro 750 million to prepare a Country by Country report, showing, inter alia, the group structure, the income, and the tax paid in each Country where the group companies carry out the business activity. Under certain conditions, the Country by Country report is mandatory also for resident companies belonging to multinational group, which are in turn controlled by a foreign company.

Reduction of period for the amortization of trademarks and goodwill

The period for the amortization of trademarks and goodwill in certain circumstances has been reduced inform 10 to 5 financial years. This amendment is effective from January 1st, 2016.

Banks and financial institutions

Interest expenses incurred by banks and financial institutions are now totally deductible (before they were deductible up to the 96%). An IRES surcharge equal to 3.5% has also been introduced for banks and financial institutions.

These amendments are effective from January 1st, 2017.