THE ANTI-TAX AVOIDANCE DIRECTIVE (ATAD) AND THE NEW EXIT TAX REGULATION IN ITALY

Art. 2, Legislative Decree No. 142 of 29 November 2018 (“LD 142/2018”) thus implementing the EU Anti-Tax Avoidance Directive 2016/1164 (“ATAD 1”) of 12 July 2016, as amended by Directive 2017/952 (“ATAD 2”) of 29 May 2017 set significant changes in the domestic exit tax regulation.

In particular, the rules concerning the transfer of residence of Italian companies abroad (art. 166 of the ITC) have been reshaped, providing new scenarios of taxation.

In a nutshell, the new law will cover transfers abroad of:

i)  the residence of Italian entities (unless the assets are entirely allocated to Italian permanent establishments);

ii)   assets held by Italian entities to permanent establishments under the “branch exemption” regime;

iii)  Italian permanent establishments of non-resident entities;

iv)  assets held by Italian permanent establishments of non-resident entities to the head-office or to another foreign permanent establishment;

v)  cross-border mergers and demergers.

With reference to the exit tax, LD 142/2018 introduced the following main changes:

-   gains subject to taxation will be calculated with reference to the arm’s length value of the transferred assets and liabilities (in place of the “nominal value”)

-  the yearly instalments to pay any gains subject to exit taxation (under certain circumstances) are reduced from 6 to 5

-  the treatment of tax losses is streamlined

Our staff is available for any clarification.