National taxation

The deductibility limits for black list costs have been reintroduced from 01/01/2023

by Emilio Veneziano

Article 1, paragraphs 84-86 of the 2023 Budget Law (L. 197/2022) has reintroduced the regulations regarding the non-deductibility of the resulting costs from transactions with companies located in non-cooperative countries or territories for tax purposes.

Specifically, as already provided for in the past, the deductibility of expenses and other negative income components deriving from operations carried out with resident companies, or those located in non-cooperative countries or territories for tax purposes, is permitted within the limits of their normal value, provided that such operations have actually been carried out.

In particular, by express regulatory provision (article 110, paragraph 9-bis et seq., TUIR), expenses and other negative components are allowed as deductions within the limits of their normal value, determined pursuant to article 9 TUIR.

In this regard, the jurisdictions identified in Annex I to the EU list of non-cooperative jurisdictions for tax purposes, adopted with conclusions of the Council of the European Union, are identified as non-cooperative countries or territories for tax purposes.

The provisions regarding black list costs also apply to the provision of services provided by professionals domiciled in non-collaborative countries or territories.

The legislation under review provides for an exception when companies resident in Italy provide proof that the operations carried out respond to an effective economic interest and that they have actually been carried out.

In the past the Revenue Agency, with resolution AdE 46/E/2004, had illustrated the data and documents deemed suitable to demonstrate the exercise of commercial activity, i.e. the Italian company carrying out commercial exchanges could acquire the following documents from the foreign entity:

• the financial statements;
• the deed of incorporation;
• a descriptive statement of the activity carried out;
• the rental contracts of the properties used as offices and business premises;
• copies of the invoices for electricity and telephone utilities;
• the employment contracts of the employees, also indicating the tasks performed;
• the bank current accounts of the foreign company;
• copies of the insurance contracts relating to employees and offices;
• the health and administrative authorizations relating to the activity carried out and the use
• of the premises.

Instead, to demonstrate the actual economic interest of the transaction, it was necessary to demonstrate the advantages achieved in the transaction, that is, the taxpayer could demonstrate:

• the particularly competitive prices charged by the supplier;
• the high quality of the goods purchased;
• the exclusivity of certain goods by a supplier;
• the advantageous payment terms granted by the supplier;
• the punctuality of delivery of the goods by the appointed carrier.

Ultimately, from 2023, companies with a broad international scope will once again have to pay particular attention to economic transactions carried out with foreign countries and, in particular, with certain non-cooperative countries or territories for tax purposes, referring to the EU list of non-cooperative jurisdictions for tax purposes which, at the moment, is made up of the following 16 states:

• American Samoa;
• Anguilla;
• Bahamas;
• Fiji;
• Guam;
• Palau;
• Panama;
• Samoa;
• Trinidad and Tobago;
• Turks and Caicos Islands;
• Virgin Islands Americans;
• Vanuatu;
• British Virgin Islands;
• Costa Rica;
• Marshall Islands;
• Russia.