The Italian Parliament has approved the Stability Law for 2016, which has revised the relevant provisions of the Italian Tax Code on black lists on corporate taxation and the Controlled Foreign Companies (CFC) rules. As a result, the Italian black list on the 'deductibility of costs' has been abolished as from 1 January 2016, as has the black list on Controlled Foreign Companies (CFCs). Therefore, from this time, Jersey will no longer be listed.
The only remaining general criterion for the application of the CFC rules (without list) will be the low level of corporate taxation of the controlled foreign company. It is considered as a low level of taxation, for both general and special regimes, a rate of 50% lower than the Italian CIT rate (which is 27.5% for 2016 and will be 24% for 2017 onwards). This will mean that the CFC provisions will continue to apply as they will to all jurisdictions who meet the low level of taxation criteria, but there will be no listing of these jurisdictions. The Italian authorities are informing the EU Commission of these changes and this should mean that Italy is not included among the Member States that are said to have a black list.
In addition, from early 2016, the Italian “white list” for the purposes of tax treatment of interest from government bonds and listed companies will be updated, taking into account the agreements on exchange of information, compliant with the international standards, entered into force in the meanwhile. Since Jersey has a legal instrument in force allowing for the exchange of information with Italy, we have been advised that it will be included in the white list. These changes also apply to Guernsey.
‘This is welcome news for our island, with Italy, a major EU country removing the blacklisting. It is testament to the determined and collaborative work between Jersey‘s government, industry and regulator on our tax transparency agenda that has helped result in this positive outcome for our future business opportunities.’ Geoff Cook, CEO, Jersey Finance.