Legnazzi & Partners
April 11, 2024
April 11, 2024
Guillermo Narvaez is a Tax Partner at Kreston FLS Mexico City Office and the Technical Tax Director, Global Tax Group, Kreston Global and member of the International Fiscal Association (IFA). Guillermo is a tax expert on international taxation, corporate taxes, transfer pricing, mergers and acquisitions, corporate reorganisations and litigation.
Within international taxation, Guillermo specialises in the analysis and interpretation of treaties to avoid double taxation applied to international transactions.
December 19, 2023
As of 2024, new rules on tax residency in Italy will change. The amendments may generate new implications when the tiebreaker of a DTA signed by Italy is intended to apply.
It corresponds to the States to set out the rules to determine when an individual should be deemed as a tax resident in that State. Accordingly, domestic tax legislation determines who will be subject to tax in a specific jurisdiction.
Tax treaties do not address this matter nonetheless they state the rules to define where an individual should be considered a tax resident when such an individual eventually is resident in two different jurisdictions at the same time. This regulation is known as ‘tiebreaker rules’ and generally is part of the residence article of double tax agreements (DTA) to define which jurisdiction has powers to tax a person and accordingly to avoid double taxation when such a person is subject to tax in two states at the same time.
One of the relevant changes in the domestic statute of Italy is in the definition of ‘domicile’. Domicile is one of the key elements to define if a person should be considered as a resident in Italy. So far (2023), an individual has their domicile in Italy when therein is their principal place of business or interests. In consequence, that person is deemed a tax resident of that country.
However, things will change in 2024. The new rules set out that domicile will be in Italy if an individual undertakes most of their personal and family relationships therein and not their business and interests. This means that the law will change from an objective criterion to a subjective one to define the residence of a person by domicile.
A first point to keep in mind is that an individual can be a resident of Italy as of 2024 without having changed their way of life at all. In other words, a change in the activity or performance of an individual is not necessarily the driver of generating new liabilities in Italy for being considered a resident of that country as of 2024 but for a legal amendment.
Tiebreakers based on the OECD Model Convention (MC) provide a hierarchy to outline the criterion to apply to define the residence of an individual. The latter will be defined in the following order – where a permanent home is available, where the centre of vital interests is located, where the habitual abode is, or according to their citizenship.
The ‘vital interests’ notion is a mixed concept comprised of objective and subjective elements interlinked. Fulfil one of the elements meaning having only personal and family ties in Italy may create residence according to the domestic framework of Italy in force as of 2024, however, when applying the tiebreaker of a DTA based on the MC it could drive to a different outcome given the lack of one of the elements of the centre of vital interests: the economic relations.
The key question to solve is, if that would be the situation, could the individual in such circumstances be deemed as a tax resident in Italy after applying the tiebreaker of a DTA based on the MC and having only in that jurisdiction personal relations? The response to that question is likely to be in a negative sense.
If you would like to discuss your tax needs with a Kreston Global expert, please get in touch.
Fabio Mazzini is an Associate Partner at Studio TDL, with a solid background in corporate and tax consultancy for multinational operations. Registered with the Vigevano (PV) Register of Chartered Accountants since April 7, 2004, and as a Statutory Auditor from March 3, 2008, he offers knowledgeable assistance in both national and international taxation. His areas of expertise include direct and indirect taxes, tax litigation, financial and tax due diligence. Mazzini is skilled in conducting company appraisals and evaluations, particularly in the contexts of corporate reorganisations and acquisitions. He serves as an auditor and Statutory Auditor for notable Italian and international companies. Fluent in English and Spanish, his professional focus encompasses Accounting and Financial Statements, Management Control, and Corporate and Contractual consultancy, as well as guiding Extraordinary Operations.
November 16, 2023
Italy’s new tax Delegation Law is set to create a significant overhaul of the tax system following the introduction of the Delegation Law, Law no. 111, effective from 29 August 2023. The legislation, published on 14 August in the Official Gazette, outlines the framework for a comprehensive tax reform to be implemented by August 2025.
The law is structured across five titles encompassing 23 articles. It outlines the general principles and implementation schedule, delves into various tax categories including income tax, VAT, and IRAP, and addresses regional and local taxes as well as gaming.
Article 7 of the law brings VAT into sharp focus, signalling a shift towards greater alignment with European Union standards. Key amendments include redefining VAT bases to reflect EU terminology, particularly in the classification of goods and services. This realignment is expected to clarify definitions surrounding contracts, share transfers, and leasing arrangements.
In a move to modernise the VAT system, the law also revises exemptions, potentially expanding VAT liability in the real estate and financial sectors. VAT rates are set for a rationalisation process, aligning with EU criteria and potentially easing the burden on socially essential goods and services.
A notable change in the VAT landscape is the introduction of more flexible deduction mechanisms. This aligns Italy with EU VAT guidelines and offers businesses a tailored approach to deductions, depending on the usage of goods and services in taxable transactions.
The law doesn’t overlook customs procedures. Article 11 proposes a digital and streamlined future for customs, enhancing efficiency in coordination, checks, and procedural aspects. This includes a comprehensive reorganisation of liquidation, assessment, and collection processes.
While the Delegation Law sets out the blueprint for reform, its full impact will unfold as specific regulations and measures are introduced. At present, no new VAT rules have come into effect, but the stage is set for significant changes.
As Italy embarks on this ambitious reform, the business community and individuals alike await the practical implications. The reform promises a more integrated and efficient tax system, in line with EU standards, but it also brings a period of adjustment and adaptation.
Read the full analysis in Italian and English here.
If you would like to get in touch with one of our tax experts in Italy, please get in touch, or contact Studio TDL directly.
This guide is an overview of the Italian’s Value Added Tax (“VAT”) system, focussed on how it affects foreign businesses trading with Italy. It is general in nature and unlikely to cover the specifics of your scenario. It should be read as such and not be construed as advice. For advice as to how your business is affected by Italian VAT please contact a Kreston Global Italian VAT specialist.
September 11, 2023
August 3, 2023
Kreston TDL Italy, a member of Kreston Global’s international network, has created a detailed 128-page guide to setting up a business in Italy. This guide is for anyone investing in Italy, to help you navigate the Italian business landscape.
Download the guide here
The guide offers an in-depth analysis of various aspects integral to operating a business in Italy. It begins with an introduction to the country’s corporate and legal structures, including an exploration of different business entity forms. Subsequent sections delve into setup and liquidation procedures, the intricacies of mergers and acquisitions, and the responsibilities arising from corporate criminal liability.
Kreston TDL’s guide shines a light on Italy’s complex taxation system. Covering corporate taxes, business income, VAT, and individual income taxation, the guide provides an exhaustive exploration of main incentives, anti-avoidance measures, and withholding taxes. It also presents in-depth knowledge on VAT registration, returns, deductibility, and the mechanisms behind international supplies of goods and services.
The guide further examines various legal aspects like customs, excise, import VAT, accounting procedures, filing requirements, and audit systems. In addition, it offers comprehensive advice on potentially challenging areas like transfer pricing, bankruptcy, reorganisation, debt restructuring procedures, and employment laws.
The guide offers you invaluable technical insights from Kreston TDL’s team of experts, to help you make informed decisions and save time and money setting up a business in Italy correctly.
Established in 1985, Studio TDL is an independent Italian firm that specialises in tax, corporate and labour consultancy, and administrative outsourcing services. With a team of Certified Accountants, Statutory Auditors, and Labour Consultants, the firm caters to multinational companies and groups, capitalising on its long-standing relationships with major international professional firms.
The quality of Studio TDL’s services is driven by the team’s high level of expertise. They offer a wide range of services in tax, corporate, accounting, and labour matters, serving both local and international clients. This is supported by the latest methodologies and a vast network of international relations.
Studio TDL’s professionals are active contributors at conferences and trade magazines and are members of study commissions set up by relevant professional institutes in Milan. This engagement, alongside their in-house Study Centre, allows them to maintain current knowledge and develop best practices. As such, they can provide reliable support for even the most complex operations. Their in-depth understanding of the Italian business environment makes Studio TDL a go-to source for business setup and operations in Italy.
Download your own copy of the guide here.
Carmen Cojocaru is a highly qualified professional with extensive experience in the fields of accounting, audit, tax, and business process outsourcing. Additionally, Carmen’s involvement with the ESG committee and Kreston Global highlights her commitment to promoting ethical business practices and fostering sustainable growth within the industry.
August 2, 2023
Sector: ESG
EFRAG has approved the European Commission’s adoption of European Sustainability Reporting Standards (ESRS). The European Commission adopted the first ESRS, set on July 31, 2023. This is mandated by the Corporate Sustainability Reporting Directive (CSRD) and covers environmental, social, and governance matters. The adoption represents a significant step towards relevant and comparable sustainability reporting and identifying sustainability-related financial risks and opportunities for companies.
The European Commission adopted the ESRS after a comprehensive process that began in September 2020. EFRAG played a significant role in this procedure, including submitting a preparatory work report to the European Commission in February 2021, launching a public consultation on Exposure Drafts of ESRS in April 2022, and providing Technical Advice to the European Commission on the final draft standards delivered in November 2022.
EFRAG is putting significant efforts into developing standards for small and medium-sized enterprises (SMEs). Additionally, they are actively preparing guidance to encourage the implementation and interoperability of ESRS with overlapping ISSB standards, contributing to the joint work with the ISSB and ensuring the interoperability of ESRS with other relevant international standards.
On August 23, the EFRAG SRB will have a public session to receive an update on the first draft of the EFRAG Implementation Guidance and FAQ regarding materiality assessment (MAIG) and value chain (VCIG). Papers related to this will be posted on or before August 16, 2023. The EFRAG SRB and EFRAG SR TEG will also review the responses to the European Commission’s consultation for feedback on the Have Your Say portal on the draft ESRS to identify priority areas for further guidance. Furthermore, EFRAG will soon establish a single access point on its website for stakeholders to ask questions about the ESRS application.
Since its inception, EFRAG has aimed to contribute to the progress of sustainability reporting worldwide while preventing EU preparers and users from having to report multiple times. During its public session on August 23, 2023, the EFRAG SRB will receive an update on interoperability with other major standard-setting initiatives. The SRB acknowledges the excellent progress made in interoperability between the ESRS adopted by the European Commission and the ISSB standards published in June (IFRS S 1 and S 2). Additionally, the SRB will receive an update on joint efforts to promote straightforward interoperability of ESRS and ISSB climate-related standards. EFRAG and the GRI have approved a joint statement acknowledging a high level of commonality and the possibility for ESRS reporting entities to report regarding GRI, which will also be submitted to the EFRAG SRB.
According to the SRB, there has been significant advancement in the development of SME standards(both for listed SMEs (LSME) and for voluntary use (VSME)). The progress on sector standards is ongoing, but the European Commission will provide updated information on the timeline in the fall.
To learn more about your ESG reporting obligations, visit our Sustainability pages.
July 7, 2023
Read our July Client Update 2023, with a wealth of insights from our experts across the network.
Read, share, and let us know your thoughts!
Kreston Global Chief Executive, Liza Robbins, discusses the challenges of doing business internationally, as we enter a “low-growth, low-investment and low-cooperation era” in an interview with Raconteur.
VAT expert, Luc Heylens from the Kreston MDS network in Belgium, discusses the VAT in a Digital Age package. This package is a set of measures developed to modernise and make the EU’s Value-Added Tax (VAT) system work better for businesses and more resilient to fraud by embracing and promoting digitalisation.
In an article published by the International Accounting Bulletin, Doron Rozenblum from Kreston IL in Israel and Herbert M. Chain from CBIZ MHM in the US elaborate on the profound changes sweeping across the profession, driven by the adoption of cloud technology and the emergence of digital assets such as cryptocurrencies.
Investments in Africa are rising, particularly within the burgeoning African “green economy”. Tarek Zouari, the Managing Partner and founder of Exco Tunisia highlights this area as a prime opportunity for foreign investors in an interview with Wealth Briefing Magazine.
Doron Rozenblum, Kreston IL, was featured in Accounting Today, sharing insights on why internal audit is the key to cyber risk management.
Dr J.P. Gupta, Chairman of the Kreston SNR Advisors LLP Board in India, has been appointed chair for the upcoming International Climate Summit: 2023.
This summit, taking place on 14 and 15 September 2023 in New Delhi, will explore utilising green hydrogen and alternative fossil fuels.
With a focus on the theme “Sustainability Through Green Growth,” this event aims to gather global leaders and experts to engage in meaningful discussions about combating climate change. The event already has over 58,000 online registrants.
Read the latest guidance in your region from our experts from the Kreston Global ESG Committee.
ExxonMobil, Mauritania
Exxon Mobil, one of the world’s largest oil and gas companies, appointed member firm Exco GHA Mauritanie to carry out accounting, tax and payroll services for three of their subsidiaries in Mauritania.
If you are interested in expanding into Mauritania, read the latest tax guide and investment advice, written by experts from EXCO GHA Mauritanie.
Doing business in The Netherlands
This useful new guide offers practical insights and tips to facilitate a smooth transition into the Netherlands business landscape.
Doing business in Chile
The comprehensive, 62-page guide offers legal and regulatory frameworks, financial activities, industry-specific scenarios and more.
Stuart is an FCA-qualified chartered accountant with more than 10 years of practical accounting and audit experience.
He leads the technical developments for Duncan & Toplis. This covers audit, financial reporting and maintaining quality of work.
He has recently been appointed to Duncan & Toplis’ operations board and become a member of the ICAEW’s influential Ethics Advisory Committee. Stuart also sits on the Kreston Global ESG Committee.
June 28, 2023
Sector: ESG
On 26 June 2023, The International Sustainability Standards Board (ISSB) issued its first two reporting standards, IFRS S1 and IFRS S2.
The issuing of these inaugural standards signifies the “ushering in a new era of sustainability-related disclosures in capital markets worldwide”.
One of the most significant limiting factors to the effectiveness of climate reporting has been the number of different bases on which entities report on. There has been a desperate need for global consistency. It is hoped that the release of these standards will be a turning point for the disclosure of climate-related risks and opportunities specific to individual entities.
These first two standards build on the ISSB’s objectives to;
S1 covers the general requirements for disclosure of sustainability-related financial information.
S1 sets the scene for the specific requirements of S2 and for future sustainability standards covering areas other than climate.
S1 adopts the structure of the Task Force on Climate-Related Financial Disclosures (TCFD). S1 also refers to other standards and frameworks in the absence of a specific ISSB standard.
The standard’s main objective is to “require an entity to disclose information about its sustainability-related risks and opportunities that is useful to users of general-purpose financial reports in making decisions relating to providing resources to the entity.”
There is a requirement that an entity discloses information about all such risks and opportunities that could reasonably be expected to affect the entity’s prospects.
S1 prescribes how an entity prepares and reports such disclosures, setting out general requirements for the content and presentation of those disclosures so that the information is useful to the users of that information.
In particular, the standard requires that an entity provides disclosures about:
S2 covers the specific requirements of climate-related disclosures.
The main objective of the standard is to “require an entity to disclose information about its climate-related risks and opportunities that is useful to users of general-purpose financial reports in making decisions relating to providing resources to the entity.”
S2 also incorporates the TCFD recommendations and guidance and includes a requirement to provide industry-specific disclosures. Industry-specific metrics are included as illustrative guidance, taken from SASB standards.
S2 specifically applies to:
In particular, the standard requires that an entity provides disclosures about:
Both standards are effective for periods beginning on or after 1 January 2024, early adoption is permitted as long as both standards are applied.
Adoption of the standards is voluntary. However, local jurisdictions may make their adoption mandatory for certain classes of entities.
At this stage there are no specific assurance requirements in place. However, analysis provided by IFAC would indicate that of the entities reviewed that did report some ESG information, over 50% have obtained some level of assurance on that information between 2019 – 2021.
Assurance has been gained from the entity’s auditor (who provides the majority) and other service providers.
Although there are no specific international ESG assurance standards currently set, the majority of assurance work was performed under ISAE 3000 (revised). The vast majority of reviews obtained limited assurance with c10% obtaining reasonable assurance.
The ISSB will be promoting the standards worldwide, working with local jurisdictions and focusing on the standard’s connectivity with financial statements. There is also currently a public consultation on four projects to further understand the standard-setting priorities covering ecosystems, human capital, human rights and integration in reporting. Further standards covering other elements of ESG are likely to follow.
In addition to the ISSB standards, EFRAG has been developing the European Sustainability Reporting Standards (ESRS – 12).
These standards have a mandatory implementation for applicable entities with a progressive phase-in period over several years, with early adoption being encouraged.
The standards have a comprehensive coverage of ESG matters, not just focusing on climate to start with.
The standards have the concept of double materiality and the ESG reports must be made in the management report, at the same time as the financial statements.
The standards also have a mandatory assurance element, starting as limited but moving to reasonable over time.
EFRAG is working with the ISSB to promote interoperability.
The European standards certainly seem to have built on the international ones so far, and are mandatory with a mandatory assurance element.
The introduction of the two SS standards is a pivotal moment in the reporting of ESG matters.
They provide a basis for international comparability and help bring ESG matters to the forefront of investors’ decision-making.
More will follow but this is a vital moment in the battle towards net zero. Read more about global ESG developments on our sustainability hub.
April 18, 2023
October 6, 2021
July 2, 2021
Sector: Promotional products
Our client, Favorite Gifts, is a successful international company. They trade with several companies (like Van Helden Relatiegeschenken, EuroGifts and Giving Europe) within Europe. They are known as a “no-nonsense” company for promotional products.
Founded as a family business in 1965, it has expanded to become one of Europe’s largest companies in the sector. Its core business is advising on and supplying a vast range of promotional gifts, from colour-changing umbrellas to eco-friendly travel cups.
They import supplies from all over the world which arrive for processing at its centres in the Netherlands and Poland, before being distributed to clients across Europe. This means that dealing successfully with varying tax rules and legislative requirements is very important to the growth of the business.
Dutch accounting firm Kreston Van Herwijnen (KVH) has connected Van Helden to Kreston firms in Spain, Germany, Italy and Poland to advise on all their local legal requirements. The firms involved are Kreston Bansbach, Kreston Iberaudit, Kreston GV and BPG Poland, and they deal with issues ranging from complying with transfer pricing obligations and national VAT legislation, to setting up local branches.
Our ongoing relationship with Van Helden is helping them evolve, expand and adapt their international trading.
Cor van Gessel, Kreston Van Herwijnen, commented: “It has been a privilege getting ‘under the skin’ of the business and getting to know their people well during our long-term partnership. We continue to learn from them so we can help their business grow and be always ready for new challenges and opportunities.”
Michiel Warners, Chief Financial Officer at Van Helden, said:
“For us, the most important aspect is that we can work with people we trust as we need to share sensitive information. I can reach out to the Kreston Van Herwijnen team anytime and know I will get an answer that counts.”
June 22, 2021
June 10, 2021