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Executive summary

With recent amendments to local legislation already applying to tax returns relating to fiscal year 2023, the deadline for submitting the Corporate Income Tax return has been shortened by two months (i.e., nine months after fiscal-year end, rather than the 11 months previously applicable).

A time-stamped electronic signature is required on transfer pricing (TP) documentation before the tax return is filed, and this shortened deadline also applies to the preparation of Local File and Master File for Italian entities.

Detailed discussion

Background

On 12 January 2024, the Legislative Decree of 8 January 2024 n. 1 (so-called "Compliance Decree") was published in the Official Journal. The Decree explains and simplifies certain rules on tax obligations, implementing Law no. 111/2023. Article 11 of the Compliance Decree modifies the ordinary deadlines for submitting tax returns.

In particular, paragraph 1 of the Article modifies Article 2, paragraphs 1 and 2, of the Presidential Decree n. 322/1998 providing that, with effect from 2 May 2024, natural persons, partnerships and entities subject to Corporate Income Tax ("IRES" in Italian) must file their respective tax returns by 30 September (instead of 30 November) of the tax period following the close of the fiscal year.

The law, therefore, modifies the provision contained in Article 2, paragraph 2, Presidential Decree n. 322/1998, providing that subjects required to pay income tax submit the declaration by the last day of the ninth month (instead of the eleventh month currently required) following the end of the financial year.

Article 11, paragraph 2 of the Compliance Decree also provides that for taxpayers with a tax period that does not correspond to the calendar year and for which the deadline for submitting IRES and IRAP (Regional Tax on Productive Activities) returns relating to the tax period prior to the one in progress on 31 December 2023 expires after 2 May 2024, the previous (11-month) submission deadlines continue to apply for that tax period.

A subsequent Legislative Decree (n. 13 of 12 February 2024) has postponed the deadline for fiscal years in progress on 31 December 2023 by an additional 15 days (i.e., 15 October 2024 for entities aligned with the calendar year).

Deadline for reporting possession of TP documentation

The Compliance Decree also impacts the deadlines for preparing TP documentation for taxpayers who opt to communicate in their tax return that they have TP documentation, which is an essential requirement for applying the penalty protection regime.

Taxpayers must prepare their TP documentation with an electronic signature and time stamp within the new deadline for submitting the tax return.

In line with paragraph 9 of the Circular Letter n. 15 of 26 November 2021 of the Italian Revenue Agency, a taxpayer also may communicate possession of TP documentation by submitting a "late return" or a "supplementary/replacing return," amending the one already presented, within 90 days from the ordinary deadline for submitting the tax return. For example, a taxpayer with financial year corresponding to the calendar year may communicate possession of TP documentation relating to fiscal year 2023 with a late or supplementary/replacement return by Monday 13 January 2025. Considering that the 15-day postponement only applies to returns relating to 2023, from 2024 the 90-day postponement would have to be calculated from the generally applicable deadline of nine months after fiscal year-end.

Implications

As the deadlines relating to tax returns have been shortened, Italian taxpayers wanting to prepare TP documentation qualifying for the penalty protection regime must note that they will have shorter timeframe in which to prepare the qualifying documentation.

In addition, affiliate companies of foreign multinationals should ensure that the new deadlines are communicated to their multinational groups to ensure that the Group Master File is collected in time to meet the deadline for the electronic signature and time stamp.