Italy: Law no. 111 enabling a tax reform approved by the Italian Parliament
Clearstream Banking1 informs clients that the Italian Parliament approved on 9 August 2023 Law no. 111 (the “Enabling Law”) that enables the Italian government to conduct an in-depth reform of its tax system.
The Enabling Law that became effective on
29 August 2023
defines, among other taxation amendments, several modifications to taxation of financial income to make it more efficient and rational.
Some of the foreseen changes are:
- The introduction of a single category of financial income, including capital income such as dividends, interests, etc. as well as income with financial nature such as capital gains;
- The determination of the financial income under a cash-principal framework;
- The revision of the Italian tax rules whereby non-resident entities are always considered tax opaque, irrespective of how they are conceived in their local jurisdictions;
- The review of the tax residence rules for individuals and companies aiming to align domestic provisions with international best practices and the double-tax treaties signed by Italy.
The Italian Government will have approximately 24 months to formally execute the principles defined in the Enabling Law, through the issuance of legislative decrees.
Impact on clients
Currently, it is not possible to anticipate the impacts of the principles outlined by the Enabling Law to non-resident investors or the date from which it will be implemented.
We continue to monitor the market and will inform clients as soon as additional information become available.
Further information
For further information, please contact the Clearstream Banking Tax Help Desk, Clearstream Banking Client Services or your Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500, and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.