New rules introduced by the European Law for 2017
PKF Studio TCL’s focus on extending tax incentives provided by article 10
On 27 November 2017 it was published on Official Gazette no. 277 Law 167 of 20 November 2017, known as "European Law 2017", in order to comply with the obligations deriving from the membership of Italy to the European Union.
Among the new rules introduced by this law, it is worth to examining article 10 entitled "Tax relieves for ships registered in the registers of the European Union Member States or the European Economic Area". The article provides for an extension of the series of tax benefits, which are currently limited to vessels registered on the Italian International Register (RII), also "to resident and non-resident taxpayers with a permanent establishment in the territory of the State and using ships entered in the registers of the States of the European Union or of the European Economic Area exclusively in relation to international trade and transactions", as referred to in the first paragraph of article 10. This extended benefit, however, is conditioned to compliance with the cabotage restrictions provided for in article 1, paragraphs 5 and 3 of DL 457/1997, of the directives contained in the Navigation Code and concerning the formation and minimum number of the crew, as well as the training of the crew itself.
The beneficial measures, thus extended also to vessels listed on the registers of the EU Member States and the European Economic Area, are the following:
- the allocation of a tax credit amounting to the income tax on natural persons payable on income of employees and self-employed workers, paid to the crew aboard the ships to be claimed against the payment of the withholding tax at source on such income;
- 20% of the income generated by the use of vessels registered on the RII for the formation of the total income is subject to Irpef and Ires;
- the value of production realized by using vessels registered in the RII is deducted from the Irap taxable base;
- the application of the "tonnage tax" regime, whereby the taxable person's income is subject to a flat-rate provided the taxpayer exercises the related option, which is irrevocable for ten years.
Hopefully, the extended rules may contribute to the recovery of the Italian maritime sector, which more than others has been negatively affected by the global economic crisis in the last years.
PKF - Studio TCL Tax Consulting Legal
Genoa – Milan