30 gennaio 2013

Law no. 134 (conversion law of Decree 83 dated June 22, 2012) entered into force in Italy on August 12, 2012. Several new measures have been introduced; some of them will be analyzed in this article in order to highlight their specificity. In particular, the analysis takes into account the introduced changes concerning the criteria of deductibility of credit losses, VAT rules regarding real estate selling and leasing, the responsibility of the client and the contractor for tax debts and new rules for the VAT payment after the collection of the amount due.

Deducibility of credit losses

With regard to the deductibility of credit losses, changes made by the Law in question, expand the possibility of automatic deduction of credit losses for individuals with a business income. In particular, the changes affect both losses related to credits owned towards debtors that are subject to bankruptcy proceedings and similar procedures and those related to credits owned towards debtors that are not subject to such procedures. With regard to credits owned towards debtors that are subject to bankruptcy proceedings and similar procedures, the conversion Law introduces the automatic deduction. While the previous legislation allowed in equal measure the deductibility of credit losses, subject to the demonstration of irrecoverability of credits, with the changes now introduced, credit losses are automatically deducted without the prior obligation of demonstration of irrecoverability when they concern credits towards companies that initiate bankruptcy proceedings and /or similar procedures, with the exception of the certificates of rehabilitation plans, according to and by effect of art. 67, paragraph 1, letter d) L.F. For credits towards entities not involved in bankruptcy proceedings, it has been established that elements considered certain and precise, with the purpose of establishing the right of deduction of the loss, remain anyway when the credit is relatively low and after a period of six months from the payment, or when the right to collect the credits is prescribed. The two hypotheses are alternative to each other and it is therefore sufficient that one of them recourses to be able to deduct the loss.

Vat regulation on real estate sales and leases

Among the important new measures, we find VAT regulation on real estate selling and leasing. The legislator has in fact rewritten numbers 8), 8-bis) and 8-ter) of art. 10 of Presidential Decree 633/72, introducing new types of VAT taxability on option, reducing the scope of application of VAT exemption (which remains, however, the "general rule" applicable to real estate selling and leasing operations put in place by VAT taxpayers). After the entering into force of Decree Law 83/2012, it became possible to opt for the application of VAT (by means of a declaration given in place by the seller or lessor):
  • since June 26, 2012, for the leasing of residential buildings perfomed, as a lessor, by the construction company or restructuring company;
  • since June 26, 2012, for all leasing of operating properties, perfomed by anyone;
  • since June 26, 2012, for the sale of residential properties perfomed, by construction companies or restructuring companies more than 5 years after the completion of construction or recovery operations (while those made within the 5 years, by the same companies, will be compulsorily taxed);
  • since August 12, 2012 (as this provision was inserted in the conversion of DL 83/2012 into Law 134/2012), for the sale of residential buildings intended for social housing, as defined by DM dated April 22, 2008, performed by anyone;
  • since June 26, 2012, for the sale of operating properties, performed by anyone, with the exception of the only residual hypothesis of taxation obligation, valid in case of sale of operating properties performed by the construction or renovation company within 5 years from completion of the work.
It should be noted that for:
  • "construction company" is meant the company that built the property which is subject to sale or lease;
  • "restructuring company" (or "renovation company") is meant the company that has performed on the property subject to sale or lease, also through other contractors, a conservative restoration, building renovation or urban restructuring (involves interventions in art. 31 co. 1, letters c), d) and e) of L. 5.8.78 n. 457, now governed by art. 3 co. 1, letters c), d) and f) of Presidential Decree dated June 06, 2001 n. 380).
With regard to the sale of residential properties, they are VAT taxable:
  • imperatively, in the case of sales made by the construction or renovation companies within 5 years from completion of the intervention;
  • optionally (if expressly manifested in place by the seller) in the case of:
    • Sales made by the construction or renovation companies after more than 5 years from completion of the intervention;
    • Sale of social housing, performed by anyone (such discipline came into force on August 12, 2012, as introduced in the conversion of DL 83/2012 into Law 134/2012);
On the contrary are VAT exempt the sales of:
  • residential buildings (other than social housing) made by entities other than the construction or renovation companies;
  • social housing or residential buildings performed by the construction or renovation companies after more than 5 years from completion of the intervention and only if the seller has not given the option to act in VAT taxation.

Client and contractor liabilities for tax debts

Further amended by the Law in question also the regulation on liability among client, contractor and subcontractor in tax area, contained in art. 35 of Legislative Decree dated July 04, 2006 n. 223 converted into Law 08.04.2006 No. 248. As a result of the new regulations is, in fact, determined that the contractor is jointly and severally liable with the subcontractor of the payment to the Treasury:
  • of withholding tax on income arising from employment;
  • of VAT due from the subcontractor in relation to the services provided under the contract.
The rule excludes such liability if the contractor/client produces the demonstration that tax payments, due by the date of the payment, have been properly completed by the subcontractor/contractor. The documentation, as required by that provision, may also consist of the certificate issued by CAF or by licensed professionals. The provision also provides that it is the contractor (as well as the client) which may suspend payment of the amount due to the subcontractor /contractor up to the production of the above documentation. New provisions on the liability of the contractor and the client will apply in relation to contracts of works, supplies and services concluded:
  • by individuals who enter into these contracts as part of the activities relevant for VAT purposes;
  • by entities subject to IRES, in art. 73 of Tax Code;
  • by the Government and public bodies, in art. 74 of Tax Code.

New regime for the payment of VAT cash

In the end, the regulation in question introduces the implementing provisions of the new VAT regime for cash, establishing the effective date of new regulations. The new rules of VAT cash apply on transactions from December 1, 2012. Since that date the existing VAT system for cash is repealed, pursuant to art. 7 of Legislative Decree dated November 29, 2008 n. 185 converted into Law dated January 28, 2009 n. 2 and DM dated March 26, 2009. VAT cash payment is allowed for taxable entities who, in the previous year, have made or, in the event of beginning of a business, plan to achieve an annual turnover which do not exceed 2 million Euros, therefore, the audience of stakeholders interested in the new discipline, enlarged given that in the existing regime the limit of the business volume business amounts to € 200,000.00. The effects of the new VAT regime for cash apply solely on the seller or lender, as the VAT related to sales of goods or services performed towards sellers or clients (taxable entities) becomes payable only on receipt of the relevant amount due, that is, one year after the time of the transaction, unless the seller or client, before that date, has been subject to bankruptcy proceedings. Unlike the current regime, for the seller or client, the right of deduction is not "hooked" anymore to the payment of the amount due, with the result that the VAT will be deducted since the time of registration of the invoice. The transactions under special arrangements of tax determining are excluded From VAT cash system.