Growth and Internationalization Decree Italian tax news September 2015

Italy’s government issued a decree that makes many changes to tax rules relevant to foreign investors and Italian companies with cross-border operations. These include changes to the measures governing tax rulings, tax havens, the migration of a company’s residence, permanent establishments (PEs) and the tax consolidation regime. The decree will enter in force as from 7 October 2015.The decree modifies the existing advance ruling regime and introduces a new form of ruling for Transfer pricing,  Preliminary assessment of the existence of an Italian PE of a foreign company and fiscal treatment of payments of dividends, interest and royalties.The decree contains rules on the determination of income derived by an Italian PE of a foreign company with OECD principles. Under the new rules, Italian PEs of foreign companies will have to prepare separate financial statements. The Italian tax authorities will issue specific rules for the quantification of the amount of the “endowment fund” for Italian PEs (the equivalent of share capital for a branch).These provisions will apply as from 1 January 2016.