Italian companies abroad between foreign investment, which often leads to the crime of tax avoidance, and legitimate delocalisation. It was discussed in Bologna on the occasion of conference organized in Italy by Synergia Consulting Group, and which also saw the participation of Baker Tilly Revisa, to present the subsidiary Baker Tilly Italy Tax: "A professional alliance", defines it the CEO Pietro Mastrapasqua, dedicated precisely to international taxation and to all issues - often thorny - that concern the internationalization of companies, such as transfer pricing and all those situations that often border on tax evasion and above all tax avoidance. "This conference was organized to make people understand the potential we have together - commented Davide Trinchero, partner of Baker Tilly Revisa - also in consideration of the recent legislation dictated by the bankruptcy law which raises the levels of obligation of the Audit for companies in Italy ”.
However, the topic of greatest interest during the meeting was foreign investment, which is nothing more than the fictitious location abroad of the tax residence of a company which, on the contrary, actually has its business in Italy: a case that lends itself to many nuances, even if recently the judicial orientation has marked a turning point from the past. The school case in the notebooks of all Italian accountants is that of Dolce&Gabbana, an Italian company that emerged unscathed in the space of a few years both from the criminal trial for avoidance but above all, a few weeks ago, from the proceeding before the tax judge, "after the Cassation explained last December - reiterated Massimo Boidi, president of Baker Tilly Italy Tax – that the subsidiary based in Luxembourg is not foreign-invested as it is not a purely artificial construction”. The subsidiary in question is GADO Sarl, a company actually based in the Principality of Luxembourg, to which the task is to collect the royalties of the Dolce&Gabbana brands.
The prosecution claimed that this business was actually managed in Milan, but the judge agreed with the two stylists. “It's a coherent decision – commented Boidi -: a limited structure is sufficient to collect royalties, but this does not mean that it was fictitious. The judge reaffirmed the right of a company to establish itself wherever it wants, and the transfer should not be criticized for the simple fact that a more favorable tax regime is chosen". The abuse of this right, moreover foreseen within Europe by the Community regulations themselves, therefore takes place only and only in the case of "purely artificial activity". That is, if the company transferred abroad is fictitious, it does not carry out any activity. In all other cases, the operation is legitimate and also excludes the omitted declaration and the possible crime of avoidance, "since a foreign dress is not added to Italian taxable income, but it is an income that is produced in another State, where taxes are paid, whether greater or lesser".
The orientation expressed by the Cassation therefore opens up to new scenarios, more permissive for businesses, a little less for tax revenues, in a country like Italy which already has an averagely high tax burden (42%, against 46% but from France, for example) and which suffers from more widespread tax evasion than elsewhere. This too was discussed at the Baker Tilly meeting in Bologna: “In reality – says Boidi – Italy does not have such higher pressure than other countries. In recent years the gap has decreased, thanks to some reforms such as the one on IRES. The Italian problem is the Effective Tax Rate, or the determination of the tax base, which is wider than elsewhere". In other words, taxes are paid on more things and less is "unloaded": thus the effective tax burden can reach 50-60%, encouraging companies to transfer part of their business abroad. Perhaps in countries which, within the same European context, offer much more advantageous tax regimes: "More than standardizing rates, one solution would already be to standardize the rules on taxable bases," says Boidi.
Italy would need it not only to retain businesses and to contain a possible "diaspora" afterwards an epochal sentence like the one on D&G, but also to attract foreign investment. An opportunity that, especially in times of Brexit, the country cannot fail to seize. “Italy is one of the world's largest economies – commented Ted Verkade, CEO of Baker Tilly International, an organization that brings together 35.000 professionals worldwide (the fifth globally by turnover, with 3,6 billion in revenues) – but its economy is mainly made up of small and medium-sized enterprises, which need to be helped in the process of growth, including internationally. Brexit is not a good thing, but it can be an opportunity for companies that want to relocate to other European countries: France, Germany, Holland are in pole position, but Italy can also play its part”. Perhaps starting to create a more inviting ecosystem even for "national champions" such as Dolce&Gabbana, after the Supreme Court has established that their partial "escape" from Italy is not illegitimate at all.
