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Taxes On Incomes. Enterprise Income Tax Breaks On Reinvested. Art. 3, Paragraphs 85, 86 And 87, December 28, 1995, Act No. 549. Criteria And Limits On Aid Intensity.

Original Language Title: Imposte su redditi. Detassazione del reddito di impresa reinvestito.Art. 3, commi 85, 86 e 87, della legge 28 dicembre 1995, n. 549.Criteri e limiti di intensita' di aiuto.

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The directions of the revenue for the autonomous provinces of Trento and Bolzano To district offices of direct taxation direct taxation and service centres, for information: At the central departments of the Department of revenue Office of the Secretary General to the central inspection service the central tax inspectors to the Ministry of the budget and economic planning at the Ministry of industry, business degree e dell'artigianato Ministry of Foreign Affairs 1-contents of the facility. December 28, 1995, law n. 549 on "rationalization measures of public finance", in art. 3, paragraph 85, States: "it is excluded from the corporate income tax on 50% of the volume of investments made in the second tax year after the year in progress at the date of June 12, 1994 in excess of the average investment of the tax period earlier than the one in which the investments are made and of the above four. The exclusion does not compete with banks and insurance companies; the amount of investment should be taken less disposals of capital goods made in the same tax year. The tax benefit applies, in accordance with the criteria and the aid intensity limits laid down by the Commission of the European communities for the various areas of intervention, for investments in areas 1, 2 and 5 objectives of which b of Regulation (EEC) No 2052/1988, as subsequently amended, as well as those made in the remaining national territory by persons who in the tax year following the year in progress at the date of June 12, 1994 they had revenues, determined in accordance with article 53 of the consolidated income tax, approved by Decree of the President of the Republic December 22, 1986, no 917, and increase of inventories provided for in articles 59 and 60 of the same text only in no more than 5 billion lire, with information on length of exercise if this is lower or higher than twelve months as well as a number of employees, calculated as an average for the year and the previous two, not more than twenty ". The facility, which referred to investments made by the companies "in the second tax year after the year in progress at the June 12, 1994" don't care if the financial year coincides with the calendar year, the fiscal year ended December 31, 1996. The benefit applies to a single tax year and operates as a decrease to be made in the tax return to the operating result. The mechanism is approved-that follows that governed by art. 3 of Decree-Law June 10, 1994, n. 357, converted by law no 489 August 8, 1994 (circular No. 181/and October 27, 1994), consisting in the exclusion from the business income of an amount equal to 50 percent of investments made in the above mentioned period in excess of the average amount of investments made in the five previous tax periods. Recipients of benefit are those that produce income, regardless of the legal form taken, excluding banks and insurance undertakings. Under subsection 86 art. 3 of law No 549 of 1995 concerned, facilitating "also applies to companies active on the date of September 15, 1995 though with an activity of enterprise under the age of five. For such companies the average amount to be considered is the one resulting from the investments made in previous tax years to that realisation of investment aided ". In this respect it should be noted that for companies whose activity is started after the June 12, 1994, the subsidized period is one year starting after September 15, 1995. Paragraph 87 of the same article 3 of law No 549 of 1995 identifies be subsidized investments, stating that "for investment refers to the construction of new plants, the completion of the extension works suspended, resuming, modernization of existing plants and buy new equipment including through finance leases". The provision clarifies that real estate investing is limited to capital equipment for nature used exclusively for the operation of the undertaking by the entity that made the investment. We note, in that regard, the limits within which a norm narrows the opportunity to facilitate investment. Indeed, investments in real estate must be instrumental in nature used "exclusively for the exercise of the undertaking by the entity that made the investment facilitated". The latter requirement must be met and verifiable within presentation of the tax return for the tax year facilitated. It is understood that, should the completion of the works take place pending between the date of the end of the financial year and the date of submission of the Declaration in which the subject uses the benefit, will be the only part of the investment aid must be made within the aforementioned time period end. 2-Assoggettabilita is of benefit to the State aid discipline. criteria and aid intensity limits laid down by the Commission of the European communities. 2.1. General specifications. The most important news of the facility in question, which differentiates it clearly from similar favour regime gone by art. 3 of that Decree-Law No. 357 of 1994 and which excludes the possibility to configure it as an extension of the latter, it is constituted by the territorial demarcation of the benefit. The art. 3, paragraph 85 of law No. 549 of 1995 restricts the operation of the facility to investments made in certain geographic areas of the country. The norm in particular bounds be subsidized investments into those "made in the areas referred to in 1, 2 goals and 5 b of Regulation (EEC) No 2052/1988". In the remaining areas of the national territory (not included in objectives 1, 2 and 5 b) the benefit shall be limited to investments made by small enterprises which comply with the following parameters: ù-revenues and increases in inventories, achieved by the company in the tax period preceding the aid must not exceed 5 billion lire; ù-the average employees, calculated in the three previous periods that aid must shall not exceed twenty. It should be noted that the territorial demarcation of the benefit concerned does not exhaust its effects in locating a more restricted sphere of operation of subsidy than regulated by art. 3 of that Decree-Law No. 357 of 1994, but determines the classification of the benefit itself as territorial State aid based on the acquis. It follows that the tax advantage in question apply, as stated in the same arrangement of concession, "policies and aid intensity limits laid down by the Commission of the European communities". The aforementioned criteria and limits imposed by the European Union are equivalent to the conditions of applicability of subsidy laid down by national legislation, competing both at the delimitation of the scope of the scheme is approved. In order to clarify the criteria and community boundaries to which it is subordinate the benefit in question must be a brief introduction. State aid in subject, considered, in principle, in accordance with art. 92, paragraph 1, of the EC Treaty, incompatible with the common market, are however permitted to specific areas of the national territory, on account of the special situation of underdevelopment or minor advantage where the same pay. Such aid "a regional purposes" can't exceed certain ceilings, which vary depending on the region considered. These ceilings, aid intensity limits defined, identify the maximum amount of aid granted in any form (financial, fiscal, etc.), expressed as a percentage of the cost of investments be subsidized. 2.2. objectives 1, 2 and 5b. For finding the intensity limits to be applied in the areas of the objectives 1, 2 and 5b, please refer to the prospectus referred to in annex 1 to this draft, the following prospectus providing for that clarification. Aid intensity limits). Intensity limits are expressed, according to Community criteria, net grant equivalent (NGE) or gross (ESL). It is a system of calculation that takes into account the extent of the aid NET or gross of taxes imposed on benefits paid. Percentages in ESN or ESL express essentially the actual economic benefit of which the firm enjoys and I mean, in the present case, the tax savings (see paragraph 3). To make clear, however, that for the purposes of determining the measures of the facility in question does not detect the difference between ESN and ESL, because, being a tax aid is not subject to tax, should be considered the nominal value of the aid. B) diversification intensity limits in relation to the size of the enterprise. The limits of intensity vary, as well as, as mentioned above, in relation to the different areas in which it is carried out the investment, including in relation to the size of the enterprise, depending on whether they are large enterprise (GI), medium-sized enterprise (I) or small business (PI). In this respect it should be noted that the size of the enterprise should be determined on the basis of the parameters laid down by Community legislation. In particular, enterprises are classified by the Commission of the European Communities (Commission communication on State aid to SMEs of March 20, 1996, recommendation of April 3, 1996, O.j. L 107 of April 30, 1996) based on the following three parameters: 1) number of employees; 2) annual turnover or balance sheet; 3) independence of the undertaking which receives it. They are medium-sized companies which have fewer than 250 employees: ù-; ù-have an annual turnover not exceeding EUR 40 million or a balance sheet not exceeding 27 million ecu; ù-have the requirement of independence as stated below. Are small businesses those that:--have less than 50 employees; --have an annual turnover not exceeding EUR 7 million, or a balance sheet not exceeding ecu 5 million;
I am in possession of the requirement for independence as stated below. Based on the information contained in the aforementioned communication of EC's March 20, 1996: a) the three criteria (number of employees, turnover or balance sheet, independence of the undertaking which receives it) are cumulative and, therefore, must co-exist for the purposes of classification of the enterprise between small and medium-sized enterprises;
b) the number of persons employed corresponds to the number of annual work units-(UTA), namely the number of persons employed full time during the period; work part-time or seasonal work are fractions of UTA;
c) the exercise worth considering is the last exercise before that facilitated;
d) turnover means, in accordance with art. 28 of the Fourth Directive 78/660 of July 25, 1978 (in O.j. L 222 of August 14, 1978), the amount of turnover including the amounts derived from the sale of products and the provision of services falling within the undertaking's ordinary activities, after deduction of sales rebates and of value added tax and other taxes directly linked to turnover. The conversion rate for the ECU reference that's attached to the end of the financial year under consideration (therefore, for those whose financial year coincides with the calendar year, the change which refer to the implementation of the provisions under consideration is that attached to the December 31, 1995). Regarding the requirement of independence, pursuant to notice of March 20, 1996 and the recommendation of April 3, 1996 mentioned, "are treated as independent companies whose capital or whose voting rights are not held for the 25% or more by one enterprise, or jointly by more businesses that do not conform to the definitions of an SME or a small enterprise, as the case may be. This threshold can be exceeded in two cases: If the company is held by ù-society of public investment, venture capital companies or institutional investors, provided that they do not exercise any control, individual or joint, on the enterprise; ù-if the capital is spread in such a way that it is impossible to determine by whom it is held and if the enterprise declares that it can legitimately presume that it's held for 25% or more by one enterprise, or jointly by more businesses that do not conform to the definitions of an SME or a small enterprise, as appropriate ". The Commission of the European communities has, moreover, made it clear that "in order to take into consideration only companies that are actually independent SMEs, takes exclude legal offences consisting of SMES which form an economic group whose power surpasses that of an SME. For the calculation of occupational and financial threshold should therefore sum data of the beneficiary enterprise and for all the enterprises which it directly or indirectly holds 25% or more of the capital or voting rights ". The Commission also pointed out that "where an undertaking, at the balance sheet date, exceeds, upwards or downwards, the thresholds of the headcount or financial ceilings stated, loses or acquires the status of ' SME ', ' medium-sized enterprise ', ' small enterprise ' only if that fact is repeated over two consecutive financial years". C) be subsidized Areas. In the table in annex 1 lists the territories in the objectives 1, 2 and 5 b. With regard to objective 1 it should be noted that the entire territory in it including noon it was recognised by the EC, to the particular situation of underdevelopment, deserving of territorial investment aid, notwithstanding the grant of such aid ban recalled the provisions of art. 92, paragraph 1, of the Treaty of Rome to protect free competition between undertakings; therefore within the objective 1 the facilitation in comment can be applied, while respecting the limits indicated in the prospectus, from both large and medium-sized that small companies. Relatively to the territories included in objectives 2 and 5 b-characterized by a situation of minor drawback-the right to grant aid by way of derogation from territorial community ban was invoked by the European Commission recognized only for investments made in certain parts of the Territories themselves-which come in attached table 1 called "with a derogation 92.3." c "-in which, equally, may be accepted as benefit of subsidy in the large object , medium and small businesses within the limits indicated in the above table. Otherwise, in the areas of the abovementioned objectives 2 and 5 b I wasn't recognised by the European Commission the derogation from the prohibition on topic ù-identified in the brochure with the phrase "without exception, 92.3. c" ù-remains closed and territorial aid I mean aid that is justified, in accordance with the Community framework, according to the disadvantage of the territory. From this follows that 2 and 5 b targets areas not assisted by derogation only aid eligible small and medium-sized enterprises and not large enterprises (save the applicability of benefit under the rule de minimis community called that you say in paragraph 5). What in that, the Community framework, recognizing in this category of small and medium-sized enterprises a physiological position of disadvantage than large companies, admitted the possibility to grant aid without any territorial limitation, by providing, to that end, limits aid percentages apply throughout the country (typically 15 percent for small enterprises and 7.5% for medium-sized enterprises). These limits are in table 1 of the annex as regards zones 2 goals and 5 b "without exception". 2.3. Remaining national territory. It should be noted that even in areas not included in objectives 1, 2 and 5 b, discovered by the art. 3, paragraph 85, of law No 549 of 1995 as "remaining national territory" shall apply in relation to the facility in question, the aid intensity limits laid down by the Commission of the European communities. In that regard, it notes that in areas of remaining national territory "facilitation can be applied, as mentioned, only for investments made by small companies identified by parameters, previously highlighted, set by the same art. 3, paragraph 85, of law No 549 of 1995. Those undertakings would normally fall within the Community definition of small enterprises and, therefore, towards them artwork of adjusts the intensity of the 15 per cent limit, valid, as he said, nationwide for small businesses. We must, however, be noted that the enterprise, even ' individually considered can be traced back from those of small size in Word, you may not be qualified as small business according to invoked criterion of independence laid down in the Community framework. If this situation occurs, if the firm is qualified as medium enterprises you will apply the limit of intensity of 7.5 per cent, while if the firm is qualified as large enterprise it carries into the prohibition of territorial aid provided under Community legislation and facilitation can be applied only in accordance with the de minimis rule (see section 5). It should be borne in mind that in certain areas of the remaining national territory, "the European Commission has permitted aid intensity limits for specific territorial, with small, medium and large enterprises. Therefore, in particular the aforementioned areas (listed in annex 2, indicating "off target, with 92.3. c waiver"), it being understood that the benefit in question can only be applied by small businesses identified according to the invoked parameters of art. 3, paragraph 85, in question, for the purposes of verifying applicable intensity limits it is necessary to have regard to percentages specially established for those areas (20 percent for small businesses; 15 percent for medium-sized enterprises; 10 percent for large firms). 3-Measure of subsidy. The limits of intensity to which he referred in the previous paragraph, as already mentioned, the extent of subsidy for the company, which is the actual economic benefit (the grant equivalent) that the company can obtain by virtue of the aid provided for by the national provision in relation to the cost of the subsidized investment. The tax advantage in question, visited by art. 3, paragraph 85, several times cited law No. 549 of 1995, is, in economic terms, from minor tax due to the effect of the deduction proportionate to the investments made. The relationship between actual economic benefit (tax savings) and total amount be subsidized investments made during the tax period must be less than or equal to the maximum permitted by the European Union. To this end must first be determined the amount of untaxed income, which, depending on the application envisaged by the said rule mechanism, it is equal to 50% of the investments made during the tax period facilitated less disposals of capital goods made in the same period in excess of the average amount of investments made in the five previous tax periods. Must therefore be calculated the minimum tax payable as a result of exclusion from the business income of the aforesaid amount taking into account for this purpose of deductions which have led to losses for tax purposes. The method of mold that is valid for this purpose is to determine the tax savings in a "virtual", as follows: a) for subject to CORPORATE INCOME TAX, assuming the rule 53.2 percent (37 percent, as CORPORATE INCOME TAX, and 16.2 percent as ILOR) of the amount, constituting a negative component, determined on the basis of investments;
b) for individual entrepreneurs, taking the difference between the INCOME TAX applies only to business income (without taking into account then any other income owned) calculated gross of the amount determined as a function of investments, which in the tax return has had negative INCOME TAX, and the component that corresponds to the business income after deducting that amount (the one I mean resulting from tax return) as well as the 16.2 percent (corresponding to the rate ILOR) of repeated amount. So if your business income without negative component given by the investment deduction is equal to 1,000 L and effect of this deduction is reduced to L. 800, the tax saving is the difference of the INCOME TAX calculated on income tax calculated on 1,000 and l. l. 800 by the amount resulting from the application of the rate of 16.2 per cent on l. 200 (1,000-800);
c) for societies of people, taking the sum of the proportion of each Member participating in the said company's income, computed according to the criterion indicated sub b) as well as the amount resulting from the application of the rate of 16.2 per cent on the amount deducted depending on the investment. The tax saving so determined must be proportional to the amount of investments be subsidized. If the percentage resulting from that relationship is greater than the maximum allowed by the European Commission the company must reduce income untaxed, limiting it to the amount by which a tax saving not exceeding permissible limits. As already clarified with circular No 108/May 3, 1996, and for the calculation of subsidy should be put in comparison, separately for each of the areas considered (objectives 1, 2 and 5 b individually considered and remaining national territory), the volume of investments made during the tax period facilitated compared with the average of those of the five previous tax periods. It should be noted, moreover, that the connection between territory and investment is given by the target objective of investment compared to existing business units on the territory or constituted as a result of investment aided; link this discoverable first findings. Please note that in order to comply with the maximum permitted percentage should be, also, whether in relation to the same investment aided the enterprise has applied for or obtained other State aid in any form. In this regard it is recalled that the benefit referred to in paragraph 85 concerned it can be combined with other discounts, save the prevention of overlapping place by the same art. 3, paragraph 91, of law No 549 of 1995. Pursuant to the above paragraph the facilitation provided by art. 3, paragraph 85, not combined with other State subsidies of any kind granted to productive activities, in accordance with art. 1, paragraph 2, of Decree-Law No 415 October 22, 1992, converted by law No 488 of the same year, and subsequent provisions laid down by Decree-Law February 8, 1995, # 32, converted by law No 104 of that same year and by the decree-law June 23, 1995, # 244, convertito dalla legge n. 341 of 1995, even if they are granted automatically in accordance with art. 1 of that Decree-Law No 244 of 1995. The same facility under art. 3, paragraph 85, remains, though, combined with the facilities at research granted under these laws. 4-be subsidized Investments. As regards the type of investments eligible it is necessary to check the compatibility of the investment with the Community guidelines. The latter generally excludes "operating aid". Constitute operating aid investments called "substitution", meaning such substantial investments in acquisitions of individual goods or modernizations of individual plants that do not correlate organically to the creation of a new settlement or the expansion of an existing one that is, however, a process of rationalisation, restructuring or modernization of the equipment company. Are eligible, in accordance with the Community framework, substantial investments in the modernization of existing equipment and purchase new equipment which together are designed to make innovations in the enterprise with the aim of achieving increased productivity and/or an improvement of ecological conditions related to processes productive. That being said, please note that the schedule of subsidy mechanism appears, as a rule, already in itself liable to prevent the benefit is attributed to investment of a mere renovation since obtaining (and quantify) of the standard postulates that it made an above-average investment volume of investments of the previous five years and also assumes said volume net of disposals which usually correlate renewal investments. However, where the volume of investments made during the tax period for aid must have identified some investments eligible for replacement, they should not be taken into account for the purposes of verification of the maximum limits for aid laid down by Community legislation; to this end, after determining the amount detassabile on the basis of paragraphs 85, 86 and 87 of the art. 3 in question and the extent of its tax savings (grant equivalent), takes place this entity in comparison with the total amount of investments of the period, adjusted to those of refurbishment and, based on this comparison, check the maximum aid payable percentage limits. Please note also that, in accordance with the communication from the European Commission, the tax advantage in question apply to investments in intangible assets only if made by SMEs; for investments of the sort made by big business, the details provided in the previous period for verification of compliance with the maximum levels of aid under the Community guidelines. 5-rules on de minimis aid. And ' Finally, we have to highlight that Community legislation allows the recognition of minimum aid entities, regardless of the relative maximum percentages set out above, in accordance with the criteria (the de minimis rule) laid down in the Commission notice on the de minimis rule for State aid (96/C 68/06), published in the official journal of the European communities of March 6, 1996, n.c. 68/9. Under such notification: the maximum total amount of de minimis aid is in category is 100,000 ECUS over a period of three years from the time of the first de minimis aid; This amount includes any public aid granted as de minimis aid and will not affect the chance of benefiting from obtaining other aid under schemes approved by the Commission. In this respect it should be noted that, in order to achieve the limit of ECU 100,000 over three years from the first de minimis aid, de minimis aid should be considered to which the subject has benefited in its reference period. For example, if an operator had such help for the first time in 1994 in the amount of 50,000 ECU (roof set by previous legislation) may, not later than 1996 (exhaustion of the triennium), receive additional 50,000 ECUs; If, on the other hand, scored for the first time in 1992 de minimis aid of ECU 50,000, having in 1996 already exhausted the period of reference, can begin to benefit from de minimis within 100,000 ECUS up to the completion of a new three-year period. For the purpose of applying the limit of 100,000 ECU under the de minimis rule, must be taken into account in the tax savings-calculated according to the criteria. shown under a), b) and c) of the preceding paragraph 3-which, of course, will not exceed a predicted. It is clarified that, despite the rules dictated by the aforementioned communication from the European Commission determines that the de minimis aid does not affect the possibility of the recipient obtaining other aid under schemes approved by the Commission, must still need to take account of the prevention of overlapping predicted, which national provision, art. 3, paragraph 91, December 28, 1995, Act No. 549. Concerning the subjective scope of application of the de minimis rule Please note that the same is applicable regardless of the size of the recipient undertakings (small, medium or large companies). It is, however, worth repeating that in respect of investments made in Territories not included in objectives 1, 2 and 5 b the benefit of tax exemption can be recognized within the limit of the de minimis rule only small businesses identified in paragraph 2. It should be noted that the de minimis rule does not apply to the fields covered by the ECSC Treaty, to shipbuilding, to transport and aid granted for expenditure on agriculture or fisheries activities. Stands out, finally, that those who wish to take advantage of the facility in question in accordance with the de minimis rule should expressly declare it in the tax return, ensuring compliance with the conditions laid down by the abovementioned communication from the Commission of the European Communities C 96/68/6.
*** Directions of receipts are requested to acknowledge receipt of this in this Department-Central Directorate for Legal Affairs and litigation; the district offices and service centers in their respective directions.
The Director General of the Revenue Department Romano