The Italian Senate approved the draft Budget Law for 2018 on 30 November 2017. The draft illustrated the definition of the domestic permanent establishment (PE) as per the definition proposed by the OECD in the BEPS Action 7 Final Report.
The draft broadened the definition of PE with respect to domestic fixed place and to an office with only one employee who purchases advertising services. According to the draft a fixed-place PE is a significant and continuous economic presence in the territory of Italy, set up in a way that it does not result in a substantial physical presence in the same territory. It also extends that fixed place of business that carries out only preparatory or auxiliary activities on behalf of a non-resident enterprise does not constitute a PE.
These changes to the domestic PE definition, if ultimately approved, will be considered with respect to Italy’s position on the Multilateral Convention, signed on 7 June 2017 The Budget Law might be amended before its final approval by 31 December 2017.
