International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Italy: Parliament sets forth guidelines for broad tax reform



Giuliano Foglia

Marco Emma

A new project for an extensive reform of the tax system has been officially launched in Italy. With Law no. 23 of March 11 2014, in fact, the Italian Parliament appointed the government with the responsibility to significantly reform and reorganise within one year the overall Italian tax system according to certain guidelines set forth therein. The envisaged tax reform is wide and grounded on purposes and principles which generally can be agreed with.

On one hand it is aimed at combating tax evasion strategies and reducing tax base erosion, through (i) stronger assessment measures in respect of, inter alia, transfer pricing, carousel frauds and fictitious residences and (ii) a wider cooperation with foreign tax authorities. Such measures should be implemented together with a reorganisation of certain cross-border and international tax regimes (for example, tax residence determination, CFC legislation, permanent establishment rules, black-listed countries' costs deduction, withholding taxes, tax losses of non-Italian resident group companies and so on).

On the other hand the reform intends to address the urgent need to (i) widely simplify and rationalise Italian tax system (for example, dropping useless formalities and obligations) and (ii) improve considerably certainty and stability of Italian fiscal legislation in order to attract foreign investors. In this respect, the Italian Government is empowered, inter alia, to deeply reform assessment procedures (based on the pillars of simplification, efficacy and guarantees for taxpayers) and tax litigation (for example, improving the technical skills of tax judges), and to rebalance the tax criminal penalties according to proportionality criteria. Moreover, decrees should be adopted to simplify and speed up the tax ruling procedures and introduce an effective cooperative compliance among certain selected departments of tax authorities and large enterprises (to be incentivised by a reduction of tax formalities and penalties).

In this scenario, probably the most anticipated measure is the review of the current anti-avoidance rules on the basis of the so-called "abuse of law" principle so far developed by the European Court of Justice (for example, the Halifax and the Cadbury Schweppes cases) and the Italian Supreme Court (Corte di Cassazione). In a nutshell, the Italian Government is now appointed to codify in an ad hoc provision the abuse-of-law principle which currently remains uncertain and subject to interpretative instability. The envisaged general anti-avoidance rule should basically consist in a prohibition to obtain undue tax advantages from a distorted use, even if not in breach of any specific provision, of juridical instruments which are suitable to grant a tax saving, provided there is a lack of sound economic reasons, not merely marginal, other than the expectation of that tax saving. The possibility for the taxpayer to select the less onerous alternative among various transactions equally practicable should, in any case, be granted.

In conclusion, a quite ambitious reform providing for several measures which, if correctly blended, could effectively lead to a more efficient, simple and steady tax system, which foreign investors could definitely appreciate.

Giuliano Foglia ( and Marco Emma (

Tremonti Vitali Romagnoli Piccardi e Associati

Tel: +39 06 3218022 (Rome) +39 02 58313707 (Milan)


more across site & bottom lb ros

More from across our site

The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.
Karl Berlin talks to Josh White about meeting the Fair Tax standard, the changing burden of country-by-country reporting, and how windfall taxes may hit renewable energy.
Sandy Markwick, head of the Tax Director Network (TDN) at Winmark, looks at the challenges of global mobility for tax management.
Taxpayers should look beyond the headline criteria of the simplification regime to ensure that their arrangements meet the arm’s-length standard, say Alejandro Ces and Mark Seddon of the EY New Zealand transfer pricing team.
In a recent webinar hosted by law firms Greenberg Traurig and Clayton Utz, officials at the IRS and ATO outlined their visions for 2023.
The Asia-Pacific awards research cycle has now begun – don’t miss on this opportunity be recognised in 2023
An intense period of lobbying and persuasion is under way as the UN secretary-general’s report on the future of international tax cooperation begins to take shape. Ralph Cunningham reports.
Fresh details of the European Commission’s state aid case against Amazon emerge, while a pension fund is suing Amgen over its tax dispute with the Internal Revenue Service.