Italy approves framework for major tax reform

• The Italian Parliament has approved a law that includes a set of general principles and criteria enabling the Government to implement a full reform of the Italian tax system (Enabling Law).
• The Enabling Law is aimed at reducing the tax burden of corporations and individuals, increasing the degree of legal certainty, reducing litigation, improving the relationship between tax authorities and taxpayers, aligning domestic rules to international tax principles (including OECD BEPS Pillar Two provisions), and ultimately outlining a system capable of attracting foreign capital.

Value Added Tax (VAT)

The Enabling Law (Article 7) includes guidance aimed at revising the domestic VAT rules for a better alignment with the applicable EU law provisions and EUCJ judgments with reference, among others, to VAT exempt transactions, VAT recovery, VAT rates and the VAT grouping.

Source EY

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