IRS, stop checking companies on losses and Covid aid
Guideline of the Vice-Minister of Economy and the Director of Finance to resolve doubts also on other subsidies granted to companies
Key points
Stop loss claims for companies that exploited Covid aid. But that's not all. The deed of address signed by Deputy Minister for the Economy Maurizio Leo and Finance Department Director Giovanni Spalletta aims at resolving all possible situations that might arise from facilitations for which there is no specific discipline in this regard. The objective is to close the game on the deed schemes that have reached and worried companies, because in the opinion of the IRS, the value of the Covid aid received had to be deducted from the losses that can be carried forward for subsequent years. Result? The Inland Revenue demanded that the usable losses for subsequent years should be lower.
The Solution
This gave rise to a problem that placed a strain on all companies that, having taken advantage of Covid aid and having reported losses in the years of the pandemic restrictions, were also caught up in schemes of deeds on the value of their loss carry-forwards.
Hence first the attempt at an interpretative rule, which according to initial intentions should have passed among the amendments of the manoeuvre. Then the choice fell on the guideline act to regulate other types of situations as well, which can be seen, for example, in the Transition 4.0 and 5.0 tax credits.
Exempt and Excluded Income
Everything revolves around the regulation of exempt and excluded income. Article 84(1), third sentence of the Tuir provides that 'the loss is reduced by tax-exempt income other than that' governed by Article 87 of the Tuir. Moreover, the same rule states that 'not the entire amount of the "exempt" income reduces the tax loss that can be carried forward, but only the portion exceeding the negative components not deducted on the basis ofArticle 109, paragraph 5, of the Tuir'. This latter article refers to exempt income as distinct from income that does not concur to the formation of income as excluded.
The distinction between excluded and exempt income - recalls the policy act - was introduced "with the Ires reform of 2004 that, compared to the previous legislation, in inserting the category of "excluded" income (i.e. dividends) among those that do not contribute to the formation of income, has, however, differentiated the tax treatment with respect to that of exempt income, allowing the deductibility of expenses and other negative components pertaining thereto and the carry-forward of losses so as to align it with that provided for taxable income.
