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Italy 2021 budget extends step-up regime for intangibles and provides for retroactive application of APAs

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January 2021


The Italian Parliament approved and published the 2021 budget law (Law no. 178/2020 or ‘the Law) in the Official Gazette on December 30.  The Law contains several corporate tax provisions, including (i) extension of the tax step-up regime to goodwill; (ii) retroactive application of advance pricing agreements; and (iii) exemptions from dividend and capital gains tax for European Union (EU) and European Economic Area (EEA) investment funds.

The takeaway

The new Italian budget law includes several important measures, including the 3% step-up regime for goodwill and other intangible assets, a new dividend withholding and capital gain tax exemption for ‘regulated’ EU and EEA investment funds, retroactive application of APAs, and revamping and introducing new tax credits and incentives to address the economic impact of the pandemic. 

Multinationals should consider the potential impact of the 2021 budget law, analyze their position for Italian tax purposes, and consider the relevant tax regimes that have been introduced or revamped (e.g., the step-up regime or the tax credits) for short-term support.  At the same time, certain new opportunities and challenges can impact multinationals significantly with respect to their long-term Italian tax position (e.g., the tax exemption for dividends and capital gains realized by EU/EEA regulated investment funds and the new APA rules).

Contact us

Bernard Moens

US International Tax Inbound Leader, PwC US

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