The 2016 Budget Law (so called 'Legge di Stabilità 2016'), Law no. 208 of 28 December 2015, was published in the Official Gazzette no. 302 of 30 December 2015. The Law offers many appealing provisions for domestic and foreign taxpayers and aims at increasing growth by easing the heavy tax burden both on individuals and corporations.
The relevant tax measures favorable for individual taxpayers can be summarized in the following points:
repeal of the local property tax on primary residences (the so called 'Tasi') as of fiscal year 2016, except for luxury residences (listed in the A/1, A/8 and A/9 cadastral categories). This will mean that 'Tari' (the local tax on environmental and waste services) will be the only local tax remaining on primary residences; clearance of a significant number of income tax deductions, such as purchase by the end of 2016 of high energy performance class residences from construction companies. In this event, the Law recognizes an income tax deduction equal to 50% of the VAT due on the purchase. Other examples are property renovations or energy requalification of residences which are, respectively, granted a 65% and 50% income tax deductions. possibility to step-up lands and unlisted shareholdings owned by natural persons (not in business regime), by paying by 30 of June 2016 an 8% substitute tax. other new relevant tax measures are: the renewal of a 65% tax credit for gifts made in favor of cultural entities or show businesses; the abolition of tax on the ownership of leisure yachts; VAT reduction of 10% for a yachtsman's overnight stop in the so called 'marina resorts' (as provided for hotels). On the other hand, companies can benefit from a great number of new tax disposals which may lead to bolstering the Italian economy and attracting foreign investors by, for instance, planning to lower the corporate tax rate, repealing the blacklist cost non-deduction rule, granting the opportunity to step-up certain business assets, enhancing the patent box regime and further important provisions. All of the main tax changes are more in depth and fully shown below.
1.1 Encourage investments in Italy by reducing the corporate income tax rate (paragraphs 61-64)
IRES (imposta sul reddito delle società ) is the Italian corporate income tax due by resident companies on their worldwide income and by nonresident companies on their Italian-source income. After many years of tax burden, finally the Italian government decided to target the economic growth by reducing the corporate income tax. The 2016 Budget Law provides that, starting from fiscal year 2017 onwards, it will enter into force a reduction of the corporate income tax (IRES) rate from 27.5% to 24%.
Banks and other financial entities will compensate the corporate tax reduction with a 3.5% surtax...