The Measure of the Director of the Italian Tax Authority prot. no. 213637/2024 which – with a view to simplifying the verification of the requirements for the application of the CFC rule, avoiding the comparison between the level of effective foreign taxation and the level of virtual domestic taxation the introduction of an optional alternative taxation regime – regulates the exercise of the option provided for in Art. 167, paragraph 4-ter, TUIR for subjecting the net accounting profit for the year of controlled foreign companies to substitute income tax at the rate of 15 percent.
In particular, the following clarifications made by the Provision are noted:
- the option lasts for three fiscal years, is irrevocable, is exercised by the ultimate controlling Italian company, and also extends to subsidiaries acquired in any capacity during the period when the option is effective;
- the net profit subject to substitute tax is excluded from the income tax base of the controlling shareholder upon receipt of the relevant income;
- credit for taxes paid abroad by subsidiaries whose income has been subject to substitute tax is not recognized;
electing the option makes the parent entity cease monitoring tax values.