On 5 October 2023, the Italian Parliament passed the amended Law No. 136, which converts into law Decree-Law No. 104 of 10 August 2023 to introduce Windfall tax for Italian banks and Italian branches of foreign banks. The amendments include following several changes to Article 26:
- The increased interest margin for banks will be calculated by comparing FY2023 to FY2021, with a minimum floor of 10%.
- Italian Tax Authorities can challenge abusive practices related to Windfall Tax payments using a general anti-avoidance rule (GAAR).
- The tax ceiling is 0.26% of the total risk-weighted assets, determined according to EU Regulation 575/2013, as of the previous year before 1 January 2023 (i.e., FY 2022).
- Banks can choose to set aside an amount equal to or greater than 2.5 times the Windfall Tax in a non-distributable reserve instead of paying the tax in cash.
- Banks are not allowed to pass the Windfall Tax burden on to their clients’ service costs.
- The windfall profits tax shall be paid within 6 months following the end of the financial year.
The amended new Law was published in the Official Gazette on 9 October 2023 and became effective from 10 October 2023.
