Tax Law

Italy and the “Brexit Decree” | Tax Issues

On March 26 2019, the Law-Decree n. 22 of 25 march 2019 containing some urgent measures in order to guarantee security, financial stability and market integrity as well as the protection of the Italian and British citizens’ health and freedom of residence, in case of withdrawal of United Kingdom from the European Union (hereinafter “the Decree”) has entered into force.

The Decree has been issued because of the uncertainty about the withdrawal of United Kingdom from the European Union, introducing measures aimed to protect the Italian financial, banking and insurance system in particular in case of non-ratification of the withdrawal agreement.

A tax provision is specifically provided for by art 13 of the Decree which regulates the aspects of the first phase of Brexit. In particular art. 13 establishes that the national tax provisions issued on the basis of the United Kingdom’s membership in the European Union will be applied for a transitional period of 18 months following the United Kingdom’s withdrawal from the European Union. During the transitional period, as specified by the law, the national implementing legislation of the EU directives concerning value added tax and excise duties will continue to be applied.

Also, the implementing provisions of the Parent-subsidiary Directive and Interest-royalty Directive and the 1,2% tax rate on outbound dividends paid to entities subject to corporate tax in Countries belonging to EU and European Economic Area would continue to be applied to UK companies. Based on the newly introduced law provision it would seem that some relevant tax rules provided by the Italian Tax Code for person resident in the European Union (for instance, rules concerning mergers, exit and entry tax) would be granted to UK entities for the transitional period at least.

However, the second paragraph of the art. 13 specifies that one or more Ministerial Decrees shall be issued in order to implement the described provision.




The content of this article is only for information and does not constitute professional advice.
For further information contact Federico Trutalli.

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