"NEWS May 25, 2016-2016 model IC Framework IRAP: Industrial Holdings"
The Decree. # 446/1997 provides in article 6, paragraph 9, that "for companies whose business is exclusively or predominantly, in taking stakes in companies credit or financial activity other than that for which there is an obligation of membership, in accordance with article 113 of the consolidated text of the laws on banking and credit Legislative Decree September 1, 1993 , n. 385, in the relevant section of list of entities operating in the financial sector, the taxable amount shall be determined by adding to the result arising from the application of article 5 the difference between interest income and similar income and interest expense and similar charges. Interest expense, contribute to the formation of the value of production as far 96 percent of their amount. "
Since article 113 of Legislative Decree # 385/1993 was repealed by article 10, paragraph 7, of Legislative Decree No. # 141/2010, to determine the requirements for the purpose of qualifying a holding as "industrial holding company", shall be deemed sufficient to the existence of a substance in the same (Note Assoholding 32/2010), namely that it meets the requirements set out in paragraph 10 of that repealing, corresponding to those already contained in the aforementioned articles 12 and 13 of D.M. # 29/2009, with regard to the assumption of the "main activity" of management of industrial holdings.
Therefore, you should check the prevalence of activity that should be to taking stakes in companies credit or financial activity other than that.
To evaluate the prevalence, the circular 37/2009 of the Inland Revenue provides a policy referring, first and foremost, the criteria identified by the previous circular 19/2009, in which it was pointed out that the exercise prevalent activity of taking stakes in companies credit and financial activity other than that is verified when the carrying amount of investments in industrial society resulting from financial results exceed 50% of the total assets.
In light of the fact that equity participation laid down by the standard does not end with the acquisition of participations, but also includes the management of the same, the circular 37 adds another important element to identify the prevailing provision or: the latter must be verified taking into account not only the carrying value of investments in industrial societies, but also in the carrying amount of the other assets of holding about relationships with the same company such as, for example, claims arising from funding.
Qualify the company as an industrial holding company, the Irap tax base, which is the value of net production, is determined by the sum of two components:
- the trade component, deriving from the application of article 5 Decree. 446/1997, and then determined according to the rules dictated by corporations and business entities;
- the financial component, the difference between interest income and similar income and interest expense and similar charges.
Also, while interest income and similar income contribute for the whole amount, interest expense are deductible to the extent of 96%.
Passive ones detect also those implicit and incorporated into financial leases, and therefore accounted for between the costs of use of third party assets to item b. 8 income statement. As a result, they, for the amount shown in the contract, should be made deductible (increase) in determining the trade component in accordance with article 5; While will detect negative, given their nature as a component of debit interest, in determining the financial component in accordance with article 6, paragraph 9 (decrease).
It is important to note that between interest income and similar income should not be covered by the proceeds from investments (dividends), which are in effect a typical revenue-characteristic of the holding. Therefore such proceeds are excluded from Irap has with reference to the commercial and financial component.
The industrial holding company must fill out in order to take account of two components to determine the Irap tax base, is the section I and section II of the IC framework.
by Bruce Ferreira
