On 5 February 2016, further budget measures were announced. The most important measures are summarized here.
Corporate income tax
(i) Patent box: The patent box regime will be amended to incorporate the “modified nexus approach” in line with BEPS Action 5.
(ii) Participation exemption: The participation exemption regime will be modified and a holding period of 1 year instead of the current 2 years will be required. Furthermore, the required minimum shareholding will be increased from 5% to 10%.
(iii) Loss carry-forward: The loss carry-forward period will be reduced from 12 to 5 years from 2017.
(iv) Valuation step-up: In 2016, a step-up option is made available for companies, allowing them to value their assets and investment companies at fair market value based on a lower rate of 14%, to be paid over a period of 3 years. This will increase the amount of depreciation of the assets over their useful lives.
(v) Group taxation: Companies having benefited from the exemption of internal profits under the special group taxation regime in force until the year 2000 will include those exempt profits in their taxable base for 2016, 2017 and 2018.
(vi) Deduction for cinematographic productions: The draft Budget provides for the introduction of a corporate income tax deduction for expenses related to cinematographic productions exceeding EUR 1 million.
(vii) Special deduction for fuel: The draft Budget provides for a deduction for companies or personal income tax businesses in respect of the acquisition of fuel destined to be used for the transport of merchandise or passengers.
Personal income tax
(i) Income tax rate: The draft Budget does not contain changes to the personal and corporate income tax rates (IRS and IRC).
(ii) Surcharge: The surcharge to the personal income tax will be phased out and no longer be due from 2017.
Exchange of information
(i) Country-by-country reporting: Country-by-country reporting is implemented pursuant to BEPS Action 13.
(ii) Implementation of EU Directive and CRS: The government will implement into domestic law Council Directive 2014/107/EU, of 9 December 2014, providing for the automatic exchange of information and the Common Reporting Standard (CRS) for exchange of information.
(iii) Renegotiation of tax treaties: The government will renegotiate tax treaties with a view to including similar terms to those used in the Directive and setting penalties for non-compliance.
(iv) Banks: Banks are required to share more taxpayer information with the tax authorities.
Social security contributions
Following negotiations with EU officials, the draft Budget does not contain the reduction of employers’ social security contributions.
Taxes on capital
(i) Special contribution for banks: The special contribution limit for banks is increased from 0.085% to 0.11% of total bank payables, with the minimum rate being 0.01%.
(ii) Exemption of municipal property tax and real estate transfer tax: The draft Budget provides for the abrogation of the exemption from municipal property tax (IMI) and real estate transfer tax (IMT) previously granted to real estate investment funds and pension funds.
The draft Budget contains the abrogation of the exemption from municipal property tax (IMI) and real estate transfer tax (IMT) previously granted to real estate investment funds and pension funds.
