A new tax amnesty program has been recently launched in Italy by the new government (see Law Decree No. 119 dated 23 October 2018). The scope of the tax amnesty program should be that of decreasing controversies and scrapping pending debts with the Revenue Agency. For these reasons, the program has been labeled as "Tax Peace" by the new government, with the effort of trying to establish more transparent relationships with taxpayers. Taxpayers may avail themselves of different mechanisms that will be better described below, but could be briefly grouped as follows:
- Settlement of tax audit reports, deeds of assessment, tax court proceedings and tax collect notices by paying only taxes assessed, without penalties and interest.
- Automatic writing-off of all debts (lower than EUR 1,000) collected by the Tax Collection Agent within fiscal years 2000 to 2010
- Filing of a supplementary tax return to amend any mistake and/or omission by paying a substitutive tax of 20% of the higher taxable base. This mechanism is currently subject to discussion.
The law decree is immediately effective, but has to be converted into law within 60 days of its approval, i.e., 22 December 2018. As of today, some amendments have already been proposed and will be commented on below.
- Tax audit reports - Article 1
Taxpayers are entitled to settle tax audit reports issued by 24 October 2018 by filing a specific integrative tax return (or, if the tax return was omitted, a new tax return has to be filed) and paying the entire amount of the higher taxes challenged, net of the relevant penalties and interest.
The specific Integrative Return has to be filed by 31 May 2019, and the taxpayer is required to pay, by the same date, either the full tax amount or the first of 20 quarterly instalments. The tax amnesty program precludes the use of the ACE regime (Allowance for Corporate Equity benefits) or losses accrued.
Moreover, the abovementioned specific Integrative Return can concern only fiscal years that can still been assessed by the Italian Tax Authorities.
However, please note that the possibility of closing tax audit reports, based on the abovementioned tax amnesty program, is precluded to taxpayers that have already received an invitation to appear from the Revenue Agency, in order to engage a negotiation in the context of a formal settlement procedure.
- Tax assessment - Article 2
By paying the total amount of taxes assessed, without penalties and interest, taxpayers are entitled to settle (i) tax assessments; (ii) an invitation to appear, indicating the liquidation of amounts challenged; and (iii) settlement deeds.
I. The tax assessments issued before 24 October 2018 still subject to appeal and not appealed yet by the taxpayer could be settled by paying the amount assessed by 23 November 2018 (although a postponement is currently under discussion). The November 23 deadline can be postponed if the taxpayer has filed a settlement request with the Revenue Agency before 24 October 2018. In this case, the payment of the higher taxes assessed (net of the relevant penalties and interest) can be made within the term for filing the appeal against the relevant tax assessment.
II. An invitation to appear issued before 24 October 2018, and clearly indicating the amounts challenged as well as the relevant grounds, can be settled by paying the higher taxes net of penalties and interest by 23 November 2018.
III. Settlement deeds signed before 24 October 2018 can be settled by paying only the relevant tax amounts, without penalties and interests, by 23 November 2018, on the condition that no payment has occurred so far.
To settle all of the administrative deeds above, the taxpayers can alternatively pay either the full tax amount or the first of 20 quarterly instalments. The payment cannot be made by offsetting the amounts due with existing tax receivables.
Deeds issued by the Revenue Agency in relation to the voluntary disclosure procedure (pursuant to Art. 5-quater of Law Decree no. 167, dated 28 June 1990) are excluded from the tax provisions above.
- Notices of payment - Article 3
A new possibility to scrap notices of payment has been introduced, the so-called "rottamazione-ter."
In particular, under the current version of the decree, taxpayers can obtain the cancellation of old debts, included in notices of payments and communicated by the Revenue Agency to the Collector Agent between 1 January 2000 and 31 December 2017, by filing a specific request by 30 April 2019 and paying the relevant taxes, net of penalties, delay-interests and collection fees. Some amendments are currently under discussion, one of which is the inclusion of the advanced notice of assessments ("Avvisi bonari") in the so-called rottamazione-ter.
The payment can be executed in full or in 10 instalments to be paid within five years. In such a case, an additional 2% interest applies. In both cases, it is possible to offset debts with existing tax receivables.
Moreover, the payment of the entire amount or the first instalment of the plan implies the cancellation of the potential pending executive procedures against the taxpayer.
If a judicial proceeding against the notices of payment subject to scrapping exists, the proceeding must be suspended by the judges upon a specific request to be filed by the taxpayer.
The case shall be withdrawn upon the presentation by one of the parties of the proof of the payments.
Several specific provisions are aimed at coordinating the new law provisions with previous similar regimes.
- Automatic write-off of debts up to EUR 1,000 - Article 4
A new tax measure has been introduced to scrap old tax debts lower than EUR 1,000 communicated by the Revenue Agency to the Collector Agent between 1 January 2000 and 31 December 2010. The scrapping is effective as of 31 December 2018.
The provision includes debts originally higher than EUR 1,000, which, due to partial payments of the overall amount, at 24 October 2018 are not higher than EUR 1,000, including capital, penalties and late-payment interest.
Please note that payments made before 24 October 2018 cannot be taken into account to decrease the amounts due. On the contrary, payments made after that date may be used to decrease other debts subject to a scrapping procedure or to offset debts already expired or close to the expiration date; otherwise, they can be reimbursed.
- Special tax collection notices - Article 5
A new tax measure consists of settling old tax debts related to special taxes, i.e., custom duties, contribution on sugar production and VAT on importation communicated by the Revenue Agency to the Collector Agent between 1 January 2000 and 31 December 2017, by paying an amount net of the relevant penalties and part of the delay interest.
In order to benefit from the present regime, the taxpayers must file a specific request to the Collector Agent, which communicates the amounts to be paid for the settlement to taxpayers.
The related payment has to be made within a specific deadline provided by the law, which varies based on the type of tax.
- Pending tax litigation proceedings - Article 6
Taxpayers are entitled to settle tax litigation proceedings pending at any level and degree, including those before the Supreme Court, by paying an amount equal to:
- 100% of the value of the case (without penalties and interest, which are cancelled)
- 50% of the value of the case when the Provincial Tax Court ruled in favor of the taxpayer (without penalties and interest, which are cancelled)
- 20% of the value when the Regional Tax Court ruled in favor of the taxpayer (while penalties and interest are cancelled)
In order to take advantage of the tax amnesty, taxpayers have to file a specific request and pay the full amount or the first of 20 quarterly instalments by 31 May 2019.
The payment cannot be made by offsetting the amounts due with existing tax receivables. However, the amounts to be paid will be net of the advance payments made pending the litigation proceedings.
Once the taxpayer applies for the tax amnesty program, the judicial proceedings can be suspended until 10 June 2019 if a specific request has been filed before the tax court entitled to decide the case's merit. An additional suspension of the judicial proceedings, until 31 December 2019, could be obtained by filing a copy of the request for tax amnesty, together with the proof of the payment of the relevant amounts, before the competent Tax Court.
If the Revenue Agency refuses to settle the tax litigations, the deed of denial can be appealed within 60 days from the notification to the taxpayer, before the court competent for the judicial proceedings.
For a tax controversy that can be settled, the terms for appealing, filing a second-level appeal, filing the counter-appeal before the Italian Supreme Court or re-opening the case, which expire between 24 October 2018 and 31 July 2019, are suspended for nine months.
- Amateur sport clubs - Article 7
A special regime allows the amateur sport clubs that join the CONI Register to:
- file a special supplementary tax return as provided in Article No. 9 of the Decree (see below), within the limit of EUR 30,000
- settle a tax assessment by paying 50% of the taxes assessed and 5% of penalties and late-payment interest (please note that VAT is excluded from the settlement provided for the tax amnesty)
- close pending tax litigation proceedings by paying an amount equal to:
- 40% of the value of the case and 5% of penalties and interest
- 10% of the value of the case and 5% of penalties and interest, in the presence of a favorable decision for the taxpayer
- 50% of the value of the case and 10% of penalties and interest, in the presence of an unfavorable decision for the taxpayer
- Consumption tax settlement - Article 8
It is also possible to achieve a settlement of tax debts related to consumption tax accrued up to 31 December 2018, and for which there is not a final decision, by paying 5% of the tax assessed, without penalties and interest.
In order to benefit from this provision, taxpayers shall file the request to the Custom Agency (Agenzia delle Dogane e dei Monopoli) by 30 April 2019.
Taxpayers shall further opt to pay the settlement amount in 120 monthly instalments.
- "Special" supplementary tax return - Article 9
The current version of the decree provides the possibility for taxpayers to amend mistakes or omissions or to integrate tax returns filed by 31 October 2017 (i.e., tax returns related to FY 2016). This mechanism is, however, subject to possible cancellation.
Taxes involved are the following:
- income taxes and related additional taxes
- substitutive taxes
- withholding taxes and social contribution
- local taxes
In order to amend mistakes or omissions or to integrate tax returns filed by 31 October 2017, the taxpayers have to electronically file a "special" supplementary tax return, which must refer to one or more fiscal years for which the assessment terms have not expired yet by 31 May 2019.
Please note that filing the abovementioned "special" supplementary tax return is subject to the following two limits:
(i) a threshold equal to 30% of the amount already declared by the taxpayer in the previous tax returns
(ii) a threshold for the taxable base to be amended, which cannot exceed EUR 100,000 for each fiscal year
On the higher taxable base resulting from the "special" supplementary tax return, the following tax rates apply, without any penalty or other fee:
- with respect to income taxes and related additional taxes, substitutive taxes, withholding taxes and social contribution and local taxes, a substitutive tax rate equal to 20% (lower than the standard CIT and Local Tax rates)
- with respect to VAT, an average rate (determined as a ratio between the VAT related to taxable transactions, net of the VAT related to the sale of depreciable goods, and the declared turnover, taking into account the existence of transactions not subject to VAT or subject to a special VAT regime) or, whether it is not possible to determine the latter, the standard rate equal to 22%.