The regional tax revenue The offices of revenue At the district offices of direct taxes At the tax office value added Ai service centers of direct and indirect taxes and, for information: At the central offices of the Department of revenue At the Directorate-General of General Affairs and staff at the general Secretariat the regions the provinces Ai Ai common Ministries At central accounts Offices of the Ministries in the general Accounting Office At provincial accounts Offices of the State At provincial directorates of the treasury At the Court of Auditors To the Presidency of the Council of Ministers At the Senate the House At the central service for Members of tax inspectors the general Command of the Guardia di Finanza the national social security Institute Foreword. The regional tax regulations on activity 'productive, visited by Legislative Decree 15 December 1997, n. 446, as amended by Legislative Decree of 10 April 1998, n. 137, was the subject of organic comments by the writer in the circular n. 97 / E of 9 April 1998, n. 141 / E of 4 June 1998. With subsequent circulars n. 144 / E of 9 June 1998, n. 188 / E of 16 July 1998, have been provided additional application instructions in response to specific questions. In view of the approach, the generality 'of taxpayers, the deadline of the second tranche of the advance, it is considered appropriate to supplement the interpretative framework by providing more clarification in relation to certain issues brought to the attention of the writer since the adoption of the mentioned circular. Preliminarily, it should be noted that with the art. 3 of the Decree-Law of 2 November 1998, n. 378, arrangements were made concerning the payment of the first installment of IRAP. That provision 'was essentially reproduced in art. 4, paragraph 1, letter d) of Legislative Decree approved by the Cabinet in its meeting of October 30, 1998, to be published in the Official Gazette (hereinafter referred to as corrective legislative decree), who has, altresi, made changes to the discipline went by legislative decree n. 446 of 1997. In the first part of this Circular, are provided clarification as to the application of the provisions on the regularization of the failure or insufficient payment of the first IRAP well 'than those contained in the aforementioned legislative decree in correction, while in the second part of the same, they are provided further clarification of certain issues concerning IRAP reported to the writer. 1. Payment of the advance IRAP 1.1 Regularization of omitted or insufficient payments relating to the first period of application of IRAP. Article. 3 of Decree-Law no. 378 of 1998 states that in art. 31, paragraph 1, of Legislative Decree n. 446 of 1997 on the first installment of IRAP, as amended, most recently, by the Legislative Decree of 10 April 1998, n. 137, and 'added at the end the following sentence: "The omitted or insufficient tax payments for the first period of application of the same, whose terms have expired on 30 October 1998 can be regularized within a period of veramento end of the first tax to be subsequently carried out at that date by applying the interest calculated at the statutory rate with maturity day by day. " As was 'stated, the abovementioned provision and' ALSO it reproduced in art. 4, paragraph 1, letter d) of that legislative decree in correction. a regard, it notes that the choice of the legislator to include that provision in two different legislative measures, one of immediate (the decretolegge) application, the other (the legislative Decree) having subsequently effect the expiry of fifteen days after its publication in the Official Journal (cd vacatio legis), is justified by the need to allow those with the tax period coincides with the calendar year and, therefore, required to make the payment of the second installment of advance payment of IRAP in the current November , rely on them right from the starting day of the relevant deadline. As evidenced by the provision surriportato text introduced by art. 3 of Decree-Law no. 378 of 1998, the legislature, in order to take account of difficulties 'application found on first-IRAP advance payment, acknowledged in favor of the taxpayer the right' to proceed to the regularization of any errors that occur in the first period related payments the application of the levy itself in this regard, first of all makes it clear that, even though they are 'the aforesaid art. 3 of Decree-Law no. 378 of 1998 amends Article. 31, paragraph 1 of Legislative Decree 15 December 1997, n. 446, regarding the first advance payment, and 'to be considered, given the wording of the provision and consider the purpose' of the same, detectable, unequivocally, the accompanying report, that regularizing argument is applicable to all payments made or that had to be executed by the date of 30 October 1998, also the balance, by all taxable IRAP and, therefore, also to public entities whose art. 3, paragraph 1, letter e) of Legislative Decree No. 446 of 1997, required down payment on a monthly basis. In the generality 'of cases, therefore, the provision in question allows those with the tax period coincides with the calendar year, including individuals held on a monthly basis to the payment in accordance with art. 30, paragraph 5, of the more 'times cited legislative decree no. 446 of 1997, to regulate, within the deadline of the first payment of the tax to be subsequently carried out on 30 October 1998, the omitted or insufficient toll payments, applying interest at the legal rate with maturity day by day. Thus, for example, taxpayers with a tax period coincides with the calendar year will regulate the omitted or insufficient payment of the first installment for 1998 by the end of the second advance payment to be made by 30 November 1998. Can not 'however possible that in special cases, the taxpayer may, at October 30, 1998, having already' made the payment of the second installment and even the payment of the balance of IRAP. In the first case, the regularization potra 'nonetheless take place on the occasion of the payment of the balance; in the second case, however, the regularization potra 'be effected only within the payment term of the second installment for the tax period following the first application of IRAP. Occurring the latter case, it should be noted that, for the purposes of this regularization, the taxpayer will have to 'use the special template provided to make the active repentance (Mod. F23), provided, however, in other cases, the use of the model normally used for tax payments (Mod. F24), or, in the above-mentioned public entities, according to the usual mode 'of payment of advances. Furthermore, the provision in question, having the character of a special rule, makes inoperative the provisions contained in article sanctions. 34 of Legislative Decree n. 446 of 1997 and art. 13 of Legislative Decree 18 December 1997, n. 472, concerning, respectively, the application of administrative sanctions in case of omitted or insufficient payment of the tax due and in the case of active repentance. Instead of sanctions, in fact, the provision provides for the application of interest-only, in addition to the amount of the tax, calculated at the legal rate with maturity day by day. It is recalled that the payment of interest at the legal rate must be carried out simultaneously with the tax payment, made under penalty of ineffectiveness of regularization. Note also that for actors with reference to the first installment of the advance payment made use of the possibility 'of rateizzarne the payment, pursuant to art. 20 of Legislative Decree July 9, 1997, n. 241, the adjustment in question can 'be made within the ordinary deadline for the payment of the second installment (generally at 30 November 1998). Please note, finally, that, as already 'made it clear in the instructions to the Method of calculation of earnings due on the first period of application of the tax, the taxpayer can' make use of the possibility 'of commisurarne the amount on the tax base it plans to liquidate for that period rather than 'on the basis of so-called "implicit tax" calculated in relation to the previous period. It reiterates, however, that even in this case, the taxpayer and 'have to respect the advance percentage (120 percent) provided, in derogation from the ordinary rules, art. 31 of Legislative Decree n. 446 of 1997. 1.2 Changes are ever since corrective legislative decree having effect on deposit payments. As mentioned in the introduction, with the aforementioned legislative decree in correction were made, among other things, further modifications to the regional tax regulations on activity 'productive contained in Legislative Decree no. 446 of 1997, we report that, with regard to specific categories of taxpayers, those changes can exert an immediate effect in recalculating the so-called implicit tax and, therefore, the purpose in making reserves to illustrate in detail the new provisions in a separate manual, the determination of the payments on account. And 'the case, for example, the provision concerning the reduction from 2.5 per cent to 1.9 per cent laid down for the first period of application of the tax, which generally coincides with the year 1998, against of those working in agriculture and small-scale fisheries cooperatives and their consortia. These parties can then proceed, in the payment of the second tranche of the advance, the recalculation of the overall amount had to take account of the effects of the reduction in tax rates. Similar consequences in terms of re-determination of the second tranche of the advance may result, for insurance companies, the amendment by which you and 'proceeded to integrate the letter e) of paragraph 1 of article. 7 of Legislative Decree n. 446 of 1997, providing for the deductibility 'interest expense for such companies classified in II.9 accounts. a) life business and III.5. a) the non-technical account, governed by law no. 173 of 1997 concerning the preparation of financial statements of insurance companies. Such companies would therefore restate the deposit due for the year 1998, taking into account the deduction of interest expense and pour, then, as a second installment, the difference between the down payment so 'restated and the amount of the first installment paid. For the purpose in question, it would point out the change with which and 'recognized qualification in any case of non-commercial entity for the purpose of IRAP consortia collective credit guarantee of first and second degree, also made under form of society 'cooperative and consortiums, under articles 29 and 30 of the law 5 October 1991, n. 317, recorded in the special section of art. 106 of Legislative Decree n. 385 of 1993. 2.Chiarimenti concerning certain problems concerning the application of IRAP. 2.1 Requirements of taxation of non-residents and determination of the value of production outside the territory of the State by persons resident. Article. 12, paragraph 2, of Legislative Decree n. 446 of 1997 states that in respect of non-resident "is considered to be produced in the territory of the region the value arising from the exercise of activities 'business, arts or professions or activities' non-commercial exercised in the same territory for a period of time not less than three months by permanent establishment or fixed base office, or resulting from agricultural undertakings carried out in the territory itself. " In Circular. 141 / E of 4 June 1998 (par. 3.5.5), and 'was stated that "the companies' and business entities not resident in the State with the office or fixed base, but not constituting a permanent establishment for tax purposes income, determine the IRAP tax base under the provisions of paragraph 1 of art. 10 for the attivita 'no commercial exercised in the State ". In the subsequent circular n. 188 / E of 16 July 1998, in response to a specific question, and 'was further stated that, in relation to non-resident companies, the tax requirement only occurs in the presence of a permanent establishment nell'accezione identified by the OECD scheme and individual international conventions against double taxation. This second interpretation is an overcoming of that expressed previously in Circular No callback. 141 / E of 4 June 1998. It reiterates, therefore, that the existence on the territory of the State of a mere purchasing office or a representative office does not lead to the acquisition of the non-resident company as a taxable person of the regional law . The policy statement also applies in relation to taxable persons established in the territory of the State in order to verify the existence of the requirement - exercise of attivita 'production abroad - placed by the same art. 12, paragraph 1, of Legislative Decree n. 446 of 1997, to benefit from the reduction of the tax base. Consequently, to an enterprise resident in Italy, the business activities abroad, for example, a mere representative office, not satisfies the requirement for the application of the aforementioned paragraph 1 of article. 12 and not to 'therefore entitled to exclude from the basis of the value share of the abstract output attributable to employees or possibly employees at that office. It should, however, stated that the effects of any division between the various regions of the value of production made by the taxable person (both resident non-resident) in the State, are relevant, in principle, all permanent settlements, such that both activities' or the phase of the production process being carried out (goods storage warehouse, purchasing offices, agencies, etc.). 2.2 Non-resident: alIIRAP extension of the exemption schemes provided by existing international conventions against double taxation on income. Turning back to the non-resident, and 'has also been proposed to the problem of the treatment of IRAP effects of permanent establishments of foreign companies engaged in a exercise in Italy, in international traffic of ships and aircraft, for which existing conventions International double taxation have the taxability 'of its income solely in the country where the headquarters of the actual management of these enterprises. In this regard, it is believed that the exemption currently provided for the purpose of income tax must be understood also granted to the effects of regional tax exclusion. What ', by virtue' of the provisions of Art. 44 of Legislative Decree n. 446 of 1997, which states that "for the application of international treaties on taxation, the regional tax on the activities 'productive and' equated to state taxes abolished by art. 36". It should, in fact, observed that pending the revision of the existing international treaties, the reported arrangement exerts substantial effects in the sense of linking the Italian State, at the time of application of IRAP towards the residents of the Contracting States, to immediately value to conventional discipline refers to the central government abolished taxes (local income tax and tax on net assets of companies). Therefore, the value of production made in Italy by such permanent establishment of sea and air transport companies to be considered exempt from IRAP to the same conditions that the existing international conventions provide for the corresponding exemption from income tax. It should be noted, however, that the exemption in question does not extend to the value of production deriving from any conduct on the part of those permanent establishments of activities' other than navigation. 2.3. cost treatment for "fringe benefits". In relation to the identification of significant negative components for IRAP purposes, 'he was asked to confirm the deductibility' of the costs incurred by an enterprise for classified goods and services, based on generally accepted accounting principles in the income statement items other than item B9 constituents and "fringe benefits" for employees pursuant to art. 48 of the Income Tax Code. It must be noted that, according to art. 5, paragraph 1, of Legislative Decree n. 446 of 1997, costs classified by nature in the income statement expressly referred to in that provision assume, in principle, relevant to the determination of the value of production. Such importance is not diminished if the goods and services are classified, to the various effects of determination of the compensation of employees, like dielementi accessories salary (called "fringe benefits"). It should, however, be remembered that, as a result of the provisions of the following art. 11, paragraph 1, letter a) of Legislative Decree No. 446 of 1997, the positive and negative components is relevant for IRAP purposes and is for the purpose of income tax must be taken, in determining the value of production, for the same amount taxable or deductible for purposes of income tax. Therefore, if the deductibility 'from the business income of a "fringe benefit" is subject to specific limitations, the same also applies in IRAP field. And 'the case, as already' clarified in Circular. 141 / E (par. 3.2.1.2), also of finance lease payments and maintenance costs for granted manufactured for use by employees - classified, respectively, B7 and B8 in the statement of income - which, pursuant to paragraph 1 bis art. 62 of the Income Tax Code, are deductible for an amount not exceeding that which constitutes income for the same employees. Unlike in the case, for example, motor vehicles granted unlimited use of employees for most of the tax period, is the costs - classified, as appropriate, in B8 voices or B10, letter b), the income statement - are deductible for the entire amount regardless of the amount eventually taxed in the hands of the employee as earned income. 2.4. Treatment regarding IRAP effects of the distribution of the reserve for accelerated depreciation for tax relief. In Circular. 141 / E (par. 3.2.1.2), and 'it was stated that, in order to determine the net value of production, the depreciation of tangible or intangible assets are relevant, by virtue' of the provisions of art. 11, paragraph 1, letter a) of Legislative Decree n. 446 of 1997, for the same amount allowed as a deduction for purposes of income tax in accordance with Articles 67 and 68 of the Income Tax Code; and 'it was also stated that "in the amount of IRAP tax base, regardless of the mode' imputation followed (registration in the income statement or the establishment of a specific reserve), the relative share anticipated amortization of Article . 67, paragraph 3, of the Income Tax Code ". Just to cover the case of early amortization deduction by the formation of a special reserve in suspension for the purpose of income tax, and 'was asked to know what the consequences are determined to IRAP effects in case of any of the aforementioned reserves distribution suspension (ie the part of it still in the tax suspension). In this regard, it is noted that, once also recognized for the purposes of determining the value of production for the early amortization relevance allocated to reserves, appear to be no reason not to recognize similar relevance to the events relating to the same reserve. Therefore, the effects that are produced for the purpose of determining the corporate income tax in case of distribution of reserves for tax relief - a tax recovery of their amount and realignment, in correspondence, the amortization tax level with the civil - inendersi must also relevant in determining the IRAP tax base. 2.5 Gains and losses arising from the realization of capital goods for tax purposes and from the realization of civilian property. Article. 11, paragraph 1, letter a) of Legislative Decree n. 446 of 1997, so 'as resulting after the change made by the Legislative Decree n. 137 of 1998, states that contribute in any case to the formation of the taxable capital gains and losses relating to capital assets resulting from the transfer of business operations. As already 'clarified in Circular. 141 / E, that provision shall be deemed applicable to capital goods for tax purposes: in relation to which, that ', also to IRAP effects of depreciation are allocated deductible. E 'it was also clarified that the exclusion of capital gains and losses arising from the transfer of business operations also covers the case of transactions relating to individual branches or business complexes. The exclusion does not apply, however, the gains and losses resulting from a mere restructuring or conversion of production operations; these operations, in fact, although they can be coated extraordinary for accounting purposes, are similar, in principle, to those relating to individual assets. Always in order to identify the relevant components for IRAP purposes, please note that in Circular. 141 / E (par. 3.2.1.2) and 'was stated that a component of the value of production also the capital gains and losses arising from the realization of assets other than those instrumental for the purpose of income tax (eg. Real estate Civil home), if classified under item A5 or B14 in the income statement. This statement 'to be understood as a rule refers to real estate companies, for which the transfer of civilian buildings not obviously stock constituents, could play, based on specific factual elements, the characters of ordinariness' (as, for example, in With recurring operations). 2.6 Privacy ordinary contributions awarded to a consortium by the associated companies to cover operating costs. E 'was proposed the issue concerning the treatment of the contributions received by a consortium compared with operating costs incurred by the consortium in the performance of their activity' for the pooled enterprises. In particular, and 'was asked to know whether it is possible to exclude from IRAP tax, the share of operating grants received (constituting, for the consortium, revenues) attributable to the incurrence by the consortium of non-deductible costs for IRAP purposes (for labor costs employee, finance charges, etc.). It is recalled in this regard that for the determination of the tax base of the consortia of industrial and commercial enterprises for the purpose of carrying out on their behalf one or more 'phases of the production process, there are no specific rules in the discipline of IRAP. This' being so, it is observed that the ordinary contributions made by the member companies make up for the consortium, also to the effects of income taxes, positive components to be classified as revenue (the income statement item A1), and are intended to cover, without distinction, operating costs, which are also classified by nature in the various items of the income statement according to the criteria generally applicable to industrial and commercial enterprises. For the member undertakings, however, contributions to the consortium management costs make up an indistinct cost to classify, as appropriate, in the entries relating to the acquisition of goods or services. Under this approach, it must be concluded that the consortium is not entitled to exclude from the basis of assessment would be correlated the share of contributions to non-deductible costs from IRAP supported by the same. At the same time, its member companies are entitled to the deduction of contributions payable to the consortium without having to assume any relief the nature of operating costs that they are intended to cover the ends of the consortium (interest expense, expenses for employees, etc.) . 2.7 Treatment costs for consultants and resident employees abroad. And speaking of common provisions, and 'was asked to know the IRAP tax treatment of costs for consultations made by persons not established in the State and, in particular land, whether for the purposes of deductibility' or the non-deductibility 'of the same costs as applicable the same rules applying to the similar nature of costs for services rendered by residents. It states in this respect, that the non-deductibility 'from the IRAP tax base of the fees for coordinated employment and continuing well' for self-employment performance, arranged by paragraph 1, no. 2, art. 11 of Legislative Decree n. 446 of 1997, and 'the objective and, therefore, independent of the fact that the employee or self-employment lender is or is not a resident of Italy. So 'as, conversely, the deduction' of costs for services rendered by artists and professionals (regular self-employed) applies to the services rendered by residents than for those made by non-resident himself 'the latter do not take the as a taxpayer for the purpose of IRAP. It should also be noted that the non-deductibility 'envisaged by the aforementioned provision of Article. 11 of Legislative Decree n. 446 of 1997, only covers the fees of art. 81, paragraph 1, letter l) - as well as 'the allowances' and the refunds referred to in letter m) - the Income Tax Code and not even those referred to in subparagraph e) of that paragraph 1 of article. 81, making up for the perceiver income activities' trade not regularly carried out (eg, commissions paid to business brokers). 2.8 Calculation of the share of interest included in the lease installments. With provision applicable to the generality 'of the taxable persons, no. 6) of the letter c) of paragraph 1 of article. 11 of Legislative Decree n. 446 of 1997, provides for the non-deductibility 'from the tax base of the portion of interest included in the lease installments. As a result of what established by decree of the Minister of Finance of 24 April 1998, the calculation of that proportion is carried out by subtracting the amount of the lease payments of the tax period the amount resulting from the ratio: the cost incurred by the company 'grantor , multiplied by the number of days of the tax period and number of days of total duration of the contract. In Circular. 141 / E, and 'it was made clear that the purpose of the said report, the cost incurred by the company' lessor shall be taken before the redemption price. It 'was reported that, especially in cases of car leasing, generally characterized by brevity' of the contract and the relevant entities 'of the redemption price, taking the cost of the grantor before the deduction of that amount can' give rise to results all incongruous and conflicting with the purpose 'of the implementing provision (interest expense equal to or even superior to the same amount of total payments for the period) and that' only to determine on a flat-rate data (share of the total interest payments) otherwise already 'deduced analytically from the contractual results. It is believed, therefore, that in order to give proper and concrete implementation to the arrangement above law, the flat-rate calculation of the portion of interest included in the lease installments to be made by assuming the cost incurred by the lessor net of the redemption price. It should also be noted that, in case of finance lease payments with non-deductible VAT for the user, for the sole fact of the discipline in question, both the amount of periodic payments and both the cost of the asset to the grantor must be assumptions excluding VAT. Remembers, altresi ', that where the amount of finance lease payments is subject to partial non-deductibility' determining the business income (as in the cases provided for in Articles 62, paragraph 1-bis and 121-bis of the income Tax Code), the share of interest expense deductible for IRAP and 'only the proportion attributable to the portion of fees deductible for the purposes of business income. Cosi ', for example, assuming a lease contract for a vehicle whose cost is 60 million, taking into account that in case of application of letter b) of paragraph 1 of article. 121-bis of the Consolidated Income Tax Act would make deductible for the purposes of business income only an amount equal to 58.33 percent of the canons of the period, when determining the tax base of IRAP the share of non-deductible interest expense and 'equal to the aforementioned percentage of 58.33 percent calculated on the amount of certain interest expense with the above flat-rate mechanism. 2.9 Regime of personnel seconded to third. Paragraph 1-bis of art. 11 of Legislative Decree n. 446 of 1997 governs the case of the so-called "secondment", providing for the exclusion from the formation of the tax base of the subject release of the amounts payable by way of recovery of costs for seconded staff and, at the same time, the non-deductibility ', for the person with whom they are posting the staff, the amounts themselves (or, in the case of determining the taxable amount by the so-pay system, their taxability '). In Circular. 141 / E, and 'it was clarified that the system set up under this provision "is applicable in respect of all employees, including, for example, employees carrying out assignments as director or auditor of the group in society'". In this regard, it should be noted further that where under the agreement between the two companies ', the amounts owed by the company' at which the manager has held the position of director or auditor are higher than those that would be granted by way of mere reimbursement of compensation and benefit expenses related to the employee "commanded" - and on the assumption, of course, whether it is reversible compensation by the employee same - the rule set out above is applicable also to the portion of excess refund such charges. Therefore, the full amount of the refund is the cost of labor non-deductible for the company 'at which it is carried out the task and not taxable income for the company' parent company. As clarified in the circular called n. 141 / E (par. 3.2.1.2), the criteria for the secondment of staff to be considered applicable, given the similarity of this case, even for the so-called "temporary work." It should, however, be remembered that, in this case, the portion of the amount that the company that "rents" the staff recharges the company that uses it, exceeding the compensation and benefit costs, constitute taxable income for the first and cost services deductible for the second also to IRAP effects. 10.2 Determination of the tax base of the housing associations to property 'divided. Paragraph 4 of Art. 17 of Legislative Decree n. 446 of 1997, provides, following the change brought by the Legislative Decree n. 137 of 1998, which, up to the splitting of the mortgage, the tax base of the company 'cooperatives to property' divided and 'determined in accordance with art. 10, paragraphs 1 and 2, of the Legislative Decree n. 446 of 1997. As stated in Circular. 141 / E, this provision implies, therefore, that even for such cooperatives - so 'as already' for housing associations to property 'undivided - the activities' direct construction of a building destined to shareholders is considered equivalent to that exerted by non-entities commercial and, therefore, amenable to the regional tax on the basis of rules of paragraph 1 of Article. 10 of Legislative Decree n. 446 of 1997. Reiterating that, given the clear wording of paragraph 4 of art literal. 17 of Legislative Decree n. 446 of 1997, the application to cooperatives in property 'uniform of the same criteria as non-commercial entities work until the time of the splitting of the mortgage - coinciding date with the deed transferring the property' of housing granted to shareholders - is further explains that, in the case of more 'lots, must be considered properly proceed with the application of the discipline in question separately for each lot. Subjects engaged in a 2:11 activity 'farm in the limits. 29 of the Income Tax Code and other activities 'occasional: mode' of reduced rate. In Circular. 141 / E (cfr. Par. 6.2) and 'was clarified that for farmers receipt of agricultural income in art. 29 of the Income Tax Code, the reduced rate provided for by Article. 45, paragraph 1, of Legislative Decree n. 446 of 1997, does not extend to other activities 'occasionally exercised (eg. Activities' occasional provision of services with agricultural machines) other than agricultural. It is considered appropriate to reiterate, in this regard, that the relevance of any such activities' for the purposes of IRAP descends from the art. 9, paragraph 1, of the aforementioned Legislative Decree no. 446 of 1997, as a result of which combine to form the tax base - while remaining firm the distinction at the rate applicable for - all subject to registration fees for VAT. 12.2 Determination of the value to be excluded from taxation for IRAP purposes for the parties operating activities' productive through the use of ships registered in the International Register. Clarification was requested as to the provision in Article. 12, paragraph 3, last sentence, of Legislative Decree n. 446 of 1997, which provides for the exclusion from the IRAP tax base of the portion of the value of production deriving the attivita 'exercised through the use of vessels registered in the register under art. 1, paragraph 1, of the decree-law n. 457 of 1997, converted with amendments by Law 27 February 1998 n. 30. That provision, for the purpose of determining the value of production share attributable to the attivita 'carried out with ships registered in the aforesaid International Register, expressly refers to Article. 5 of the same decree, and that means' the criteria laid down for the identification of positive and negative components that form the basis of assessment for the industrial companies, commercial and of services. It is believed, therefore, overcoming the approach adopted in circular no. 141 / E (see. Section 4.2, last sentence), the share of value of production, to be discounted from IRAP tax base pursuant to Art. 12, paragraph 3, last sentence, of Legislative Decree n. 446 of 1997, should be found not already 'on the basis of territorial allocation formula to be made with regard to human dislocation employee art. 4 of Legislative Decree n. 446 of 1997, but rather 'with reference to positive and negative components relevant for IRAP purposes pursuant to art. 5, paragraphs 1 and 11 of Legislative Decree n. 446 of 1997, specifically referring to the attivita 'exercised through the use of ships registered in the International Register. It should also be noted that the negative components relating to goods and services used promiscuously exercise of that activity 'and other activities' possibly carried out by the above undertakings are attributable to the attivita' exercised through the use of ships registered in international for the amount corresponding to the ratio between the amount of the positive components relevant for IRAP purposes specifically related to the aforementioned activities' and the total amount of all the positive components relevant for IRAP. Similar criteria will also make it applicable to undertakings engaged in fishing beyond the narrow and those who exercise the Mediterranean fisheries since, under Article. 4 of the law 27 February 1998 n. 30, to such persons and ', in general, be accorded the same treatment applicable for tax purposes and contribution to business operators shipowning activities' with ships registered in the International Register. 13.2 Geographical distribution of production value based on earnings: treatment of compensation paid to directors. Under Article. 4, paragraph 2, of Legislative Decree n. 446 of 1997, for persons who carry out the geographical breakdown of the value of production based on the criterion of job displacement factor (and equivalent employees, co-workers and associates in participation), that 'it is necessary to identify and' the factory, construction site, office or other production facility, operating for at least three months during the tax period, where the staff can 'be considered involved with continuity'. In this regard, and 'was asked to provide further details to the territorial allocation formula with reference to the remuneration of the company' administrators. In Circular. 141 / E (cfr. Par. 4.2), and 'it was observed that, with specific reference to the requirement of verification of continuity' (meaning permanent presence of the personnel at the workplace), the criteria applicable to employees are also apply to coordinated and continuous, and to participating associates a single job. On the basis of this approach must therefore be concluded that even for companies' directors must have regard to the place in which they normally carry out their tasks, in general, should coincide with the place of administrative management of the enterprise even if different from the registered office. In the interpretive vein, may 'be regarded as the reference datum, the effects in question, for the members of the board, is the one at which this body meets regularly. 14.2 Liquidation of society ': transitional arrangements applicable to proceedings in progress at the date of entry into force of IRAP. With respect to validation, and 'it was asked to provide further clarification in relation to cases of iniziatesi procedures in periods prior to the first application of IRAP and the closing of which is taken within this period, usually coinciding with the financial year 1998, or in successive periods. In that regard, it should be stated, in general terms, that the prerequisite for application of IRAP remains firm in all cases of voluntary liquidation; whereas, in cases of bankruptcy and compulsory winding-up, the assumption occurs only on condition that there is temporary operation of the enterprise. These rules apply, in addition, also for the procedures started in previous periods to those of the first application of IRAP and still in progress at that time and, therefore, for the tax years of falling under liquidation time of application of the new rules introduced by legislative decree No. 446 of 1997, ceases in any case the ILOR application. This' place, it must be recalled that, with specific reference to voluntary liquidation, the regulations set forth in art. 124 of the Income Tax Code provides that if the process continues after the year in which it started, the income for that and subsequent periods are determined on a provisional basis and are subject to final adjustment unless the settlement does not last for more 'five years (three, for individual businesses), including the initial one, in which case - as in the case of failure to submit the final budget - income (and taxes) of intermediate periods consider determined definitively. This language rule is invoked to IRAP effects and, therefore, must be considered that the determination of the value of production realized in each period of liquidation occurs conduct outright and not 'subject to any final adjustment. It also seems the case, to state that, with reference to transitory situations such as the one proposed, subject to the application of the ordinary rules for the possible adjustment to be made to the personal income tax (corporate income tax or personal income tax), there must be the conduct of the adjustment also with regard all'ILOR himself 'limited to the results relating to the prior settlement periods to that of IRAP effect. 15.2 Determination of advances in cases of merger, demerger and transformation that occurred during the tax period. E 'was asked to provide clarification as to the correct compliance with the deposit payment obligations in cases of merger and demerger with retroactive well' effects in conversions. With regard to mergers and spin-offs, it is firstly noted that, in general, does not pose different problems from those that are generated to the same effects in the determination and payment of corporate income tax advances. It is also necessary to recall that the matter concerning the payment obligations of tax payments on the occasion of mergers and demergers has recently formed the subject of a specific legislative intervention. The reference and 'art. 4 of the Decree-Law of 11 March 1997, n. 50, converted into Law May 9, 1997, n. 122. That provision, which, given its general nature, it is also applicable to IRAP effects, provides that in merger and split the payment obligations - including those as a down payment - levied on individuals who go extinct due of these operations "are fulfilled by the same subjects until the effective date of the merger or division in accordance with, respectively, 2504-bis, second paragraph, and 2504-decies, first paragraph, first sentence, of the civil code" and, later that date, the same "obligations refer to in effect transferred to the company 'acquiring, receiving or otherwise resulting from the merger or spin-off". This' place, with regard to cases where the operation takes retroactive effect at the beginning of the tax year of the company 'fused, merged or spun-off during which the same occurs, it should be noted that the company' merged, incorporated or split and 'estate, in principle, to make payments on account whose terms are due to expire before the date of the transaction (art. 2504-bis, paragraph 2, of the civil code) himself' this is payments in relation to a tax period intended, by virtue 'of the backdating, to fail. Of course, these payments may be placed in a separate entity from acquiring or merged or split by the beneficiaries in the determination of the tax balance related to the period during which intervenes the merger or division. No obligation of payment, however, is ripe for the company 'fused, merged or divided from the date of the transaction, determining itself to that date the extinction of the said persons. Moreover, under the principle of subrogation established by Article. 4 of Decree-Law no. 50 of 1997, payments on account of the company 'merging or merged company or of' beneficiary of the split, due after the date of the transaction, must be calculated taking into account the tax paid by the companies' incorporated or merged or by the company 'split in the declaration of such subjects related to the tax year preceding the one in which intervenes the merger or division. It should be noted, however, that both companies 'merged, merged or split, for payments to be made before the effective date of the transaction, and both companies' resulting, surviving beneficiary or, for payments to be carried out later, can still avail itself of the faculty 'planned in general dalladisciplina of commisurarne advances the amount not already' to data from the presented statements for the previous tax year (in the case of IRAP, to data generated by the tax payment schedule Figurative ) but on the cd as "provisional" and that means' to lower tax which will provide for a settlement for the period competence on the part of the aforesaid company 'successor (merging, resulting or beneficiary). In order, finally, to processing operations that involve the transition from society 'of people to companies' capital or vice versa, and thus determine the termination of the tax period, this Ministry had already' opportunity to make in circular No callback. 144 / E (see. No answer. 4.7.). In addition to what is expressed in such a place, please note that, for example, in the case of transformation of a society 'of capital in societa' of people, with effect from 1 October 1998, the company 'transformed and' required to submit the declaration for the autonomous period 1 January to 30 September 1998 and payment of the balance of tax due for that period. Moreover, the same company ', given the continuity' to the effects of subjectivity 'passive,' held, within of a statement, to make payment of the first installment of IRAP for the first period posttrasformazione taking, which gave on which of fixing the amount of such payment, the tax resulting from the declaration of the period 1 January to 30 September 1998. 16.2 Determination of the tax base with the cD system. pay: the treatment of arrears for salaries of previous years. Article. 36, paragraph 2, of Legislative Decree n. 446 of 1997 provides for payments related to taxes and contributions abolished following the introduction of IRAP, whose taxation conditions have occurred before the date from which, in respect of individual taxpayers, effect their removal, are also made after that date. E 'was asked to know whether this provision becomes applicable in the case of sums paid as an employment arrears, by parties that determine the tax base with the CD system. pay. In this regard, it is noted that the provision of employment arrears (also subjected to separate taxation in respect of IRPEF) not constituted grounds regulated by the aforementioned paragraph 2 of art. 36, since the tax is assumed for the purposes of taxation and social security contributions to both ends of the sums paid by way of arrears of remuneration can not 'be traced to pertinence to the previous year but must be understood realized in the same delivery. On the other hand, for those who adopt the above pay system, the IRAP tax base coincides with the relevant salary for social security purposes determined in accordance with art. 12 of the Decree of the President of the Republic n. 153 of 1969, as replaced by art. 6 of Legislative Decree 2 September 1997, n. 314, which are certainly to be ricomprendersi the wage arrears of previous years. 17.2 Determination of the net value of production of subjects in art. 3, paragraph 1, letter e) of Legislative Decree n. 446 of 1997. Income products abroad. E 'was asked to know if the purpose of determining the value of net production of public and private bodies in art. 87, paragraph 1, letter c) of the Income Tax Code, including those indicated in art. 88 as well as' the company 'and the entities referred to in subparagraph d) of that paragraph, are to be considered also the income produced outside the territory of the State or by non-residents, such as, for example, allowances' paid to representatives Italians in the European Parliament or the emoluments of the ambassadors at Italian embassies abroad. In this regard, it should be noted that Article. 12, paragraph 1, of Legislative Decree n. 446 of 1997 expressly provides that "in respect of taxable persons resident in the territory of the State exercising activities 'production abroad as the share of value attributable to this according to the criteria of Art. 4, paragraph 2, and' scomputata from the taxable amount determined in accordance with articles 5 to 10. " From that provision, therefore, that the subjects that determine the net value of production with the "pay" system, such as public and private sector entities, exercising activities exclusively 'non-trade, including the organs and government departments, should not be subject to IRAP emoluments relating to recipients who perform the activities' offices operating for a period of time not less than three months outside the national territory. 18.2 Determination of the net value of production of subjects in art. 3, paragraph 1, letter e) of Legislative Decree n. 446 of 1997. Income in art. 47, paragraph 1, letter c) of the Income Tax Code. Were received questions in order to know if the purpose of determining the value of net production of public and private bodies in art. 87, paragraph 1, letter c) of the Income Tax Code, including those indicated in art. 88 as well as 'the company' and the entities referred to in subparagraph d) of that paragraph are to be considered also as income from art. 47, paragraph 1, letter c) of that Income Tax Code. It 'was, altresi', asked to clarify, if IRAP may be payable in respect of such income would fall on the amounts owing to the recipient and, therefore, affect the recipient thereof. In this regard, it should be noted that Article. 10 of Legislative Decree n. 446 of 1997, as amended by the Corrective Decree, excluded from the tax base the amounts referred to in Article. 47, paragraph 1, letter c) of the Income Tax Code "exempt from personal income tax, relating to scholarships or grants awarded until 31 December 1999". This exclusion, which takes effect already 'from the first period of application of IRAP, concerns, in particular: 1) the scholarships granted by the ordinary regions, according to the law 2 December 1991 n. 390, university students and those paid by the special status regions and autonomous provinces of Trento and Bolzano on the same basis; 2) the scholarships granted by the universities' and the university institutes, according to the law 30 November 1989 n. 398, to attend post-graduate courses and graduate schools, for PhD courses, Activity 'postdoctoral research and for advanced courses abroad; 3) scholarships awarded pursuant to Legislative Decree of 8 August 1991, n. 257, for the attendance of university schools of specialization of the faculty 'of medicine and surgery. Therefore, the income referred to in Article. 47, paragraph 1, letter c) of the Income Tax Code, other than scholarships listed above, should be considered relevant to the determination of the IRAP tax base of the subjects that determine the net value of production with the "pay system", as public and private sector entities, exercising activities exclusively 'non-trade, including the organs and government departments, on which consequently bears the burden corresponding to IRAP. 2.19 Application of IRAP against public entities, state bodies and administrations. The regional application of the tax on the activities 'of production in relation to the authorities, has already' been the subject of a special circular n. 97 / E of 9 April 1998. In view of certain doubts of interpretation, for more 'manifest parties, please provide the following further clarification. With regard to public bodies, state organs and administrations who do not perform activities' commercial, which apply IRAP with the so-called "compensation method" by means of payments in monthly payment, it should be specified that such persons are required to submit the first IRAP declaration within six months after the close of the tax period (ie by the end of June 1999). In such a place must be made for equalization operations and possibly its payment of the tax in due time. It also points out that among the subjects in art. 10, paragraph 3, of Legislative Decree n. 446 of 1997 also includes orders and professional colleges which thus determine the IRAP tax base with the so-called "pay" method and pay the down payment on a monthly basis in accordance with art. 30, paragraph 5, of the legislative decree. The beneficiaries of the provisions of Art. 10, paragraph 3, of Legislative Decree n. 446 of 1997, which also exercise attivita 'commercial, may opt for determining the IRAP tax base according to the criteria set out in Article. 5 of the said measure. The option can 'be exercised when IRAP declaration to be presented in June 1999. Therefore, in the event that such persons have carried out, during 1998, payments in monthly payment, also referred to the employees employed in the attivita' commercial, you may, during the presentation of the statement IRAP, operated deduct the monthly payments relating to these employees by the share of IRAP due for the attivita 'commercial. 20.2 Geographical distribution of tax payment in the different payment from that carried out during the balance. In Circular. 188 / E (see. No answer. 14), and 'was made clear that the taxpayer at the time of payment of the deposit has attributed the tax to one or more 'regions and in the payment of the balance is at share differently the tax, not' required to make any compensation among the minor amounts holds in the deposit to determine regions and major amounts paid to other regions; the task of proceeding with the adjustment operations between regions and ', in fact, entrusted to the financial administration. In confirming the above, it should be noted further that in the described case it is not, however, apply the penalty provided for by art. 34 of Legislative Decree n. 446 of 1997 on the case of omitted or insufficient payment of the tax that occurs only if the amount of the advance paid by the taxpayer globally have fallen below the minimum required by tax rules (for the first period of application of tribute, 120 percent of the so-called implicit tax or, if lower, effectively tax due). It should, however, be remembered that if the tax allocation adopted in the interim than one that was applicable at the time of the balance assumes significant size and depends on erroneous information contained in the prospectus of the advance IRAP, and 'in the right' office to proceed 'application of the residual penalty prescribed in Article. 33 of Legislative Decree n. 446 1997 2.21 Taxable amount of banks: treatment of costs incurred to facilitate the exodus of employees. With specific regard to the determination of the value of net production of banks (Art. 6, paragraph 1 of Legislative Decree no. 446 of 1997), and 'was asked to provide clarification in relation to the processing costs incurred by these entities, under art. 59, paragraph 3, of the law 27 December 1997 n. 449, in order to promote, in cases of restructuring or reorganization, the exodus of personnel made redundant through provision of special allowances'. It 'was, in particular, asked to know whether, in the event that these costs are treated in the accounts, together with the other restructuring or reorganization costs, treated as deferred charges (to be distributed over five years), the same will also make deductible IRAP purposes. About it is believed that these costs, although classified in the accounts as corporate restructuring, maintain, regarding IRAP effects, the nature of costs related to employees like the ordinary sums granted to employees upon termination of the employment relationship and, therefore, they are to be considered in any case non-deductible for the purposes of determining the value of production. Offices in address will insure the widest possible dissemination of the contents of this circular. The Director General of the Department of the Roman revenue