Italy’s Ministry of Finance announced, on 3 June 2024, the publication of the “Decree of 1 July 2024”. It contains the methods of implementing the national minimum tax or Qualified Domestic Minimum Top-up Tax (QDMTT) provided for in Article 18 of Legislative Decree no. 209/2023.

The tax, which applies with priority over the supplementary minimum tax (IIR) and the supplementary minimum tax (UTPR), is aimed at Italian companies belonging to large groups (multinationals and domestic), subject to the rules of the global minimum tax, which in Italy have an effective income tax rate lower than 15%.

The QDMTT was introduced under Legislative Decree No. 209 of 27 December 2023, which enacted the Pillar Two global minimum tax in line with Council Directive (EU) 2022/2523 of 14 December 2022.

The Decree provides clarification on key terms, explains the application scope and conditions for the QDMTT, specifies the calculation methodology, identifies the applicable local accounting standards and transitional and safe harbour provisions.

It confirms that the QDMTT will be effective for financial years commencing from 31 December, 2023.

Earlier, the Ministry of Finance published the ‘TSH decree,’ which was published in the official gazette on 28 May, 2024. This decree implements the Pillar Two transitional safe harbour (TSH) rules, as stipulated in Article 39 of Legislative Decree No. 209/2023, which aligns with the Council Directive (EU) 2523/2022.

Italy plans to implement the Pillar Two or GloBE rules from 1 January, 2024, except the undertaxed profits rule (UTPR), which comes into effect on 1 January, 2025. The TSH rules include a transitional country-by-country (CbC) reporting safe harbour (CbCR TSH) and a transitional UTPR safe harbour (UTPR TSH).