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Italy unveils 2024 Budget Law and tax reforms

Updated: Feb 13

The comprehensive tax reform framework in Italy, in accordance with Law n. 111/2023 dated 9 August 2023, is progressing through the issuance of legislative decrees. Notably, Legislative Decree n. 209, effective from 29 December 2023, implements Pillar Two provisions, modifies CFC regulations, introduces penalty protection for ATAD 2 hybrids, and establishes an income exemption for business onshoring. The decree also brings changes to tax residence rules and the "Inbound workers regime."


Legislative Decree n. 219, effective from 18 January 2024, enhances taxpayer protection during preliminary stages of tax audits. Legislative Decree n. 220, effective from 4 January 2024, encourages the resolution of tax disputes through strengthened in-court settlement methods.

Legislative Decree n. 221 , effective from 18 January 2024, significantly improves Italy's cooperative compliance program, fostering collaboration between tax authorities and taxpayers to prevent litigation and mitigate tax penalties.


Legislative Decree n. 216, effective from 31 December 2023, repeals the Notional Interest Deduction (NID) regime and revises individual income tax brackets and rates for 2024.


Italy's Budget Law n. 213, dated 30 December 2023, effective from 1 January 2024, introduces key tax measures, including extending the participation exemption regime to qualifying non-resident companies and implementing a step-up regime for Italian participations held by non-residents.

Major tax changes for corporations encompass Pillar Two provisions, CFC regulation amendments, penalty protection for ATAD 2 hybrids, income exemption for business onshoring, alterations to tax-residence rules, extension of capital gain exemption to EU entities, NID benefit repeal, Cooperative Compliance Regime enhancement, and step-up regime revamping for Italian land and non-resident-held participations. For individuals, changes include amendments to tax residence rules, modifications to the "Inbound workers regime," and reshuffling of income tax brackets and rates for 2024.


Contacts


If you require assistance in relation to the above and/or would like to discuss anything further, please do not hesitate to contact info@act.london or your usual A.C.T. contact.

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