19. BUSINESS INCOMES

It’s necessary to award the (statutory) entrepreneur 19.1 The notion of business income It’s an entrepreneur who professionally exercises an economic activity organized in order to produce or exchange goods or services Art. 2082 Civil code professionaly organization economically It’s necessary to award the (statutory) entrepreneur conduct activities with economical method cover costs with revenues, potential profitability potential production of new wealth You need a certain level of hetero-organization, without which it borders on self-employment Program Single act Activity

Exercise of commercial companies For usual occupation Even non-exclusive Although not organized in corporate form Business income (art. 55 T.U. 917/1986) Activities (pursuant to art. 2195 of the Civil Code): industrial direct to the production of goods or services; intermediary in the movement of goods; of transport by land, water and air; banking and insurance; auxiliary to the preceding agricultural activities that exceed the limits (Art. 32, c.2, T.U. 917/1986) organized activities to provide services not included in Art. 2195 cc In any case exploitation of mines, quarries, peat bogs, salt marshes, lakes, ponds, inland waters

Exercise for usual occupation In the absence, other income (occasional income Requirement of habitualness stability repetitiveness the time period can be as a long or short-term but in any case determinable Temporal continuaty It produces business income even a single deal as long as important economically and consists of several operating steps (ex breakwater) seasonal businesses

Even non-exclusive Generates business income also the activities carried out simultaneously with other non-trade activities. Exception in the case of a trade company Except to the individual entrepreneur, in which case it is necessary that the gain results from the exercise of the company.

Irrelevance of the organization in the form of enterprise Contrary to the requirements in the field of civil law It detects only the activity pursued irrelevant qualification of the subject and the organization's existence Relevance of the activities fixed by art. 2195 cc

personal physical and intellectual energies, for example. photographer In particular, services personal physical and intellectual energies, for example. photographer Hetero-organization, eg. hotel services Production of services Provision of services not included in Art. 2195 cc Even if not organized Only if organized Not organized Business income Self employment income Othe incomes (if occasional)

19.2 The notion of agricoltural business Agricoltural entrepeneur (art. 2135 c.c.) Who excercises the following activities: Cultivation of the land Forestry Fosterage related activities Agricoltural and land income (art. 32 T.U. 917/1986) handling storage transformation marketing promotion of products obtained mainly from the cultivation Fosterage within certain limits concept of the prevalence Exceeding the limits Production of a business income

19.3 The taxation of income produced in a associative form Companies Non commercial entities Irpef Ires S.n.c. S.a.s. società di fatto Società di armamento public and private entities, with or without legal personality, other than companies ecclesiastical institutions foundations cultural, sports, political, labor trusts Ires S.p.a. S.a.p.a. S.r.l. S.coop. Società mutua assicurazione optional regimes: partnerships may opt for separate taxation corporations may opt for transparency In general, the above classification is linked to the legal form of the subject, remaining irrelevant activity exercised However, there are cases of overcoming the formal constraint, watching the actual conduct of the activities carried on, finding inspiration from the principle of neutrality of the forms

Partnerships (s.n.c., s.a.s.) commercial, residents Non Irpef subjects Shall be assimilated: de facto companies professional associations shipping company simple societies Principle of transparency: The company's income is allocated to shareholders regardless of the distribution in proportion to the share profit Principle of attraction in the business income (art. 6, c.3, T.U. 917/1986): every income must be considered as a business income Principle of identification between the company and shareholders

Losses are transfered to the stakeholders Partnership Formal obligations Business income If the share holder is a person there is a business income and non a capital income Losses are transfered to the stakeholders

Non taxable incomes (art. 91) 19.4. Positive components of business income Positive components Revenues (art. 85 T.U. 917/1986) Gains (artt. 86-87 T.U. 917/1986) Dividends, Interest (artt. 89-90 T.U. 917/1986) Contingent incomes (art.88) Non taxable incomes (art. 91)

19.4.1. Revenues Revenues (artt. 57, 85 T.U. 917/1986) Sales prices Commodity goods, ie goods and provision of services to the whose production and exchange the business is adressed Of company shares, bonds and other securities: not classified as financial assets even when the goods are not commodities goods not subject to the participation exemption regime. Non-operating assets, purchased or produced to be used in production compensation for damages for the loss or damage of goods which originate revenues (those indicated by the letter. a) to the letter. e) art. 85 T.U. Contributions resulting from contract or for operating expenses under Law closure case: Revenues from goods (normal value) not destined for business purposes or transferred to shareholders For individual entrepreneurs, those for personal consumption or family (art. 57 T.U. 917/1986)

The different relationship of positive components with the activities and the program Revenues Gains Contingent incomes Sale of goods related to the core business Sale of instrumental and capital goods extraordinariness event occurred after the closing of the balance sheet connecting link with the positive or negative component recorded as received

Contributions/grants Payable in respect of the contract For operating expenses based on rule of law Capital revenues Contingent assets Investment for future activities

Payable in respect of the contract (art. 85, lett. g T.U. 917/1986) The release is part of an obligation on the undertaking for the realization of its program incomes Participation in company costs in respect of an asset Other than contributions or donations (contingent assets) Different from the revenues produced by the core business activity Accrual based accounting principle

Contributions/Grants related to income (art. 85, lett. h T.U. 917/1986) Recovering the business activity costs Economic support for the company (ie. contributions to the agricultural sector; sectors with administered prices) They represent revenues Mere grant nature Accrual based accounting principle

The compensation for damages and different relationship with the activities and the program Allowances resulting from damage to property related to the enterprise (artt. 85 e 86 T.U. 917/1986) Equivalent to revenues Even if there is non exchange

Personal or family consume (artt. 58, 85 e 86 del T.U. 917/1986) Treated as income or gains It interrupts the previous and planned functional use of company assets Definitive change of relationship from the business to the personal sphere

The assumption is not the consumer but the connection of the effects of the consumption to no business purpose, the absence of remuneration of production factors The goods are used for personal purposes and not for entrepreneurial activity.

Assignement of assets to members Income relevance (artt. 85 e 86 T.U. 917/1986) Miss continuation of an entrepreneurial relation Antiavoidance reasons

Financial fixed assets 19.4.2 Business capital gains Capital gains arising from the sale or transfert of assets other than those that produce revenues Depreciable assets Business assets Financial fixed assets

The participation exemption Financial capital gains: from the sale of shares or shares in companies (of any type) or entities; from similar financial instruments Art. 87 T.U. 917/1986 Non taxable for 95% , taxable for the 5% (PEX) To prevent unfair tax competition intra UE or with tax heavens Subjectives conditions 12 months holding period Effective business activity carried on by the participate company Residence not in a tax heaven Recording in the first balance sheet under financial assets

19.4.3. Contingent incomes (Art. 88 T.U. 917/1986) extraordinary income having a causal connection with administrative events recognized in prior years heterogeneous situations and correctional facility The tax autonomy of the obligation has to bend so the temporal dynamics of economic reality regarding subsequent events raised, in tax years other than those in which revenues and costs have been charged and amending the entity of the latte

Proper contingent incomes increments that can be traced back to the operational performance of the company with rectifying function income and revenues against expenses, losses or charges deducted or liabilities recorded in prior years Supervening inexistence of expenses, losses or charges deducted or liabilities recognized in the financial statements in prior years revenues or other income received for amounts exceeding what has contributed to income in prior years

Improper contingent incomes compensation for damages for harm other than those referred to income and capital gains grants and donations Not considered contingent assets since it is essentially: alternative ways of capital transactions compensation of a state deficit or the company's financial empowerment; Payments in cash or in kind made to lost or capital fund by its members to companies and commercial entities subject to IRES; renunciation of shareholders to the credits reduction of the debts during the bankruptcy agreement or estimate

19.4.4. Dividends and interest (art.89) (art. 89 T.U. 917/1986) Transparency taxation for partnerships Application for corporations

Taxpayer subject to Irpef not entrepeneur (art. 47 T.U. 917/1986) Taxability in the hands of the income producer with irrelevance of the next steps of the income distribution Taxpayer subject to Irpef not entrepeneur (art. 47 T.U. 917/1986) Taxpayer subject to Irpef entrepeneur (art. 59 T.U. 917/1986) Taxpayer subject to Ires as a company (art. 89 T.U. 917/1986)

Taxpayer subject to Irpef not entrepeneur (art. 47 T.U. 917/1986) non-qualified investments, ie <2% or 20% of the voting rights or <5 or 25% of the share capital. Qualifying holdings, ie 2% or 20% of the voting rights or> 5 or 25% of the share capital Dividends are taxed for 49.72% of the amount received by requirement for inclusion in the tax return . Dividends are taxed necessarily withholding tax (12.5%) as imposed, without prior inclusion in the tax return.

Taxpayer subject to Irpef entrepeneur (art. 59 T.U. 917/1986) The tax is equal to 49.72% of the dividend distributed

Taxpayer subject to Ires as a company (art. 89 T.U. 917/1986) Taxation is always equal to 5% of the dividend distributed It does not detect the type of participation or its location in the financial statements Deductibility of costs and expenses related to the management of the investment and the dividend (art. 109 c. 5 T.U. 917/1986)

A component of the income for the amount accrued in the exercise Interests A component of the income for the amount accrued in the exercise If there is no written agreement, it is assumed at the legal rate

19.5. Negative components of business income Production of Positive components Deduction Negative components Income Tax liability Principles Requirments Existence Accounting competence Inherence Correlation revenues and costs determined or determinable ammount

allocation to the income statement Exceptions Allocated in I.S of previous year (Deferred deduction by obligation / right Not allocable but deductable by law Not allocated but resultant by certain elements and precise, and specifically related revenues