M&A Digest


This Primer was put together with the help of Psaier & Partner, CPA, Bressanone, Italy.

 

Italy: Primer on Company Taxes

1. Corporation Tax:
The national corporation tax rate is 33%
An additional local tax (IRAP) is 4.25%.

For the purpose of IRAP, personnel expenses, the net financial and the net extraordinary items are to be added back to the tax base. As a result, the effective tax rate usually is higher than the nominal tax rate of 37.25%.

2. Taxes on Dividends:
If recipient is

a) Italian Corporation:
95% of dividends are tax-exempt, 5% of dividends are subject to 33% tax rate
100% of the dividends are tax-exempt if the emitting corporation and the receiving corporation are consolidated for tax purposes.

b) Foreign Investor: 27% - depending on the country. Double taxation agreements may reduce this rate.

3. Capital Gains Tax:
84% of capital gains are tax-exempt, provided

  • uninterrupted ownership of at least 18months;
  • the investor/investing entity has been holding the shares for an uninterrupted
  • period of at least 18 months.

4. Consortium Relief:
Corporations can opt for transparent taxation (i.e. taxation at level of shareholder) provided that

  • the shareholders are corporations (incl. foreign companies) if their share is 10% or higher;
  • all shareholders opt for it.