21. INTERNATIONAL INCOMES

21.1 The international tax rules systhem Domestic tax law (revenues taxation – V.a.t. Conventional double tax avoidance law Europena tax law

Domestic tax ruleks cases with foreign elements that generate income transnational internal rules that determine personal connecting factors (residence) and real (source) of the case internal rules governing the tax treatment of the cases that are transnational internal rules to prevent double taxation

Treaty against double income taxation The conventional rules Treaty against double income taxation Resolution of conflicts regarding tax claims of two states with original taxing sovereignity set of rules in relation to the different income situations which may give rise to tax competition between the two states; these rules fix the tax power exclusively or in concurrence Double taxation is prevented and resolved by a tax credit or tax exemption Concurrent tax power

Only if more favourable to the tax payer prevail On the Treaties Domestic rules Only if more favourable to the tax payer (art. 169 del TUIR) In addiction of 75 del D.P.R. n. 600 del 1973 disposes that” ... The application of the provisions concerning income taxes are without prejudice to international agreements ratified in Italy”.

Europena tax law sources European Treaty Primary european tax sources Secondary european tax sources Europena regulations European directices decisions raccomandations European Court of Justice

23.2 THE WORLDWIDE TAXATION PRINCIPLE BY DOMESTIC LAW the income of the resident citizens are subject to direct taxation irrespective of where such income was generated. artt. 1, 2 e 3 del TUIR.

residents non residents All possessed incomes, both in Italy and abroad combine to determine the tax base only the one produced in the State, under the principle of territoriality, contributes. Double taxation risk signing international agreements that aim to mutually define the mode of taxation on the basis of either country tax credit, to recognize the individual resident who has suffered the double taxation (Art. 165 Income Tax Code).

23.3 the connecting eleents for non resident tax payers The non-residents are subject to taxation in the cases provided for by art. 23 of the Income Tax Code. for each income category connecting factor with the Italian State whether the conditions for each connecting factor occurred, the income of non-resident is subject to taxation in Italy

According to art.23 the following incomes are taxed in Italy: a) The income from land; b) the income payable by the State, by persons resident in the territory of the State or by permanent establishments in the territory of the same non-residents, excluding interest and other income from bank and postal deposits and current accounts; c) the salary of employees paid in the State, including income similar to those of employee referred to in subparagraphs a) and b) of paragraph 1 of article. 50; d) the self-employment income derived from activities performed in the State; e) the business income derived from activities performed in the State through a permanent establishment; (Continued)

f) income from the various activities carried out in the territory of the State and assets located in the Territory, as well as gains from the disposal for consideration of shareholdings in resident companies, with the exception of: 1. of the gains referred to in letter c-bis) of paragraph 1, Article 67 of the Income Tax Code, arising from the disposal for consideration of shareholdings in companies resident traded on regulated markets, wherever held; 2. of the gains referred to in letter c-ter) of the same article from the sale for consideration or by redemption of securities not representing goods and mass certified in regulated markets, as well as from disposal or withdrawal of foreign currencies arising from deposits and current accounts; 3. income referred to in letters c-quater) and c-d) of the same article in contracts concluded, including the involvement of intermediaries, on regulated markets; g) income referred to in Articles 5, 115 and 116 of the Income Tax Code attributable to members, associates or non-resident participants

23.4 THE PERMANENT ESTABLISHMENT fixed place of business through which the non-resident enterprise shall, in whole or in part, its activity on the territory of the State P.E. (art. 162 TUIR) physical space even in a non-exclusive, to the foreign company available in the territory of the state Fixed place no casual connection places of the national territory The organization used over a period, as is required for the performance of an activity not merely occasional.

23.4. THE SINGLES EXAMPLES For p.e. we can intend management offices branches Offices, workshops and laboratories Places of extraction of natural resources (mining, oil or gas wells, quarries, etc.).

It does not constitute a permanent establishment or fixed place of installation business established for the sole purpose of: Art. 162 T.U. storage, display or delivery of goods or merchandise purchase of goods collection and supply of information advertising scientific research engage in activities which have a preparatory or auxiliary character (or non-essential to the enterprise and only carried out for the benefit of the enterprise).

23.5 the personal p.e. the person, resident or non-resident, who in the State habitually concludes, in the same name of the company, contracts other than those of purchasing goods It’s a p.e. only one subject "dependent" (legally and economically). Dependance detailed instructions economic impact in the enterprise sphere purchaser only business risk

23.6 THE TRANSFER OF THE REGISTERED OFFICE OF FOREIGN COMPANIES The transfer abroad of the residence of companies and commercial entities (art. 166 T.U. 917/1986) resulting in the loss of the residence It constitutes, for the purposes of income tax, a realizable hypotheses to the normal value of the components of the company, except that they are not incorporated into a Permanent Establishment located in the Italian territory. he same provision applies if in a later moment the components merged in the Stable Organization in the State are deterred by it.

attracting to tax assets that, in case of transfer of the company's residence abroad, may escape taxation. ratio application all assets related to the company and not just those that are part in the technical sense of a business complex Except for goodwill and that for the fact that, in case of a business transfer abroad, the simultaneous transfer of legal title of the company doesn’t takes place