As anticipated in our “Italy implements the DAC 6 Directive” Alert dated August 27, 2020, Ministerial Decree of November 17, 2020 (the Decree) and Ruling 364425 of November 26, 2020 issued by the Director of the Revenue Agency (the Ruling), have now been published. With the Decree and the Ruling, which provide additional guidelines on Reportable Cross-Border Arrangements, the legislative framework for the implementation of the DAC 6 Directive in Italy is complete, although interpretative guidance from the Revenue Agency is still missing.
The Decree finally clarified the minimum standard requirement related to (i) the presence of relevant reportable information (Hallmarks A, B, C and E) and (ii) the concept of “tax advantage” (Hallmarks A, B, C.1(b)(1), C.1(c) and C.1(d)), namely:
- a cross-border arrangement (other than those which are relevant under Hallmarks D) is reportable only if it is able to lead to a reduction in tax due by a taxpayer in a EU Member State, or in a third country with which an exchange of information agreement is in place;
- the tax advantage is equal to the difference between the taxes to be paid based on one or more cross-border arrangements and the taxes which would have been paid in the absence of such arrangements. The said difference must be higher than 50% of the sum of tax and non-tax advantages.
Nonetheless, the quantification of the tax advantage is always crucial, even when the hallmark is not linked to the "main benefit test", since – with reference to all the Hallmarks A, B, C and E – the value of the cross-border arrangement to be reported is equal to the tax advantage arising from it.
Additionally, the Decree provides specific clarifications on the application and definitions of certain Hallmarks: a list of examples of reportable arrangements concerning the automatic exchange of information on financial accounts and “Opaque Offshore Structures” is given in Annex A to the Decree.
The Ruling provides further practical indications regarding the information to be submitted, the procedure and related deadlines.
The reportable arrangements related to the period between July 1, 2020 and December 31, 2020 must be reported within 30 days starting from January 1, 2021, while those arrangements already implemented between 25 June 2018 and 30 June 2020 must be reported within February 28, 2021.
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