On 28 December 2023, Italy published the Legislative Decree n. 209 dated 27 December 2023 in the Official Journal. The Decree announces the implementation of the EU Minimum Tax Directive (Council Directive (EU) 2022/2523 of 14 December 2022) in Italy, effective 1 January 2024.
This includes the introduction of the Pillar 2 income inclusion rule (IIR) and the undertaxed payment/profit rule (UTPR) to ensure a minimum corporate tax of 15% for large multinational (MNE) groups with annual consolidated revenue of at least EUR 750 million in at least two of the preceding four fiscal years.
The rules apply to all domestic and international groups with a parent company or subsidiary in an EU member state. The bill also proposes implementing a qualified domestic minimum top-up tax (QDMTT) for members of in-scope groups and certain safe harbors. The IIR and QDMTT apply for financial periods beginning on or after 31 December 2023, while the UTPR generally applies for fiscal periods starting on or after 31 December 2024.
The legislation also introduces:
- the National Minimum Tax (Qualified Domestic Minimum Top-Up Tax or QDMTT) for Italian entities within large multinational and national groups with an effective tax rate (ETR) below 15%;
- A mandatory minimum supplementary tax (Income Inclusion Rule or IIR) is to be paid by parent companies in relation to low-tax entities outside Italy (including stateless entities);
- A mandatory additional minimum tax (Undertaxed Profits Rule or UTPR) is to be paid by one or more companies within a multinational group based in Italy. This tax pertains to group companies situated in low-tax jurisdictions where it has not been fully or partially applied. This obligation also extends to parent companies in different countries.
