Law Decree no. 66 published in the Official Gazette on 24 April 2014 confirms certain tax changes that were previously announced on 12 March 2014. The measures include a reduction of the regional tax on productive activities (IRAP) from a standard rate of 3.9% to a new rate of 3.5%. The rates applying to financial institutions and insurance businesses are being decreased to 4.2% and 5.3%. The flat tax on financial income is being increased to 26%. The measures also introduce an individual income tax bonus (IRPEF bonus). This is given as a tax credit in an amount up to EUR 80 according to the income level and will be paid by employers to their employees as part of the monthly wages.
The rate of the flat tax applying to dividends, interest, and some capital gains will be raised to 26% with effect from 1 July 2014. Interest and capital gains on Government Bonds will be taxed at a reduced rate of 12.5%.
The Decree also amends the one-off asset step up regime that was brought in by the 2014 Stability Law. This measure opportunity for Italian companies to step up the tax basis of qualifying assets that were included on their 2013 balance sheet, by paying a 12% or 16% substitute tax.
