Summary
- Decrease to 1% of the legal interest rate
- Effective date
- Fiscal effects
3.1 Self regularization
3.2 Instalment plans for amounts due on the base of assessments
3.3 Measure of interests not agreed in writings
3.4 Payment into instalments of the substitutive tax due for re-evaluation of participations and land properties
3.5 Adjustment of rations on usufructs and life rents for indirect taxation - Effects on contribution
1. INTRODUCTION
With Ministry Decree dated 12.12.2013, published on the Official Gazette on 13.12.2013 nr. 292, the legal interest rate set by article 1284 of the Italian Civil Code has been decreased from 2,5% to 1% on a year basis.
2. EFFECTIVE DATE
The new legal interest rate at 1% is effective starting from January 1st 2014.
3. FISCAL EFFECTS
The variation of the legal interest rate has effects also on some fiscal measures.
3.1 Self Regularization
The decrease of the legal interest rate implies the decrease of the amounts due for self-regularizations made under article 13 of the Legislative Decree nr. 472 dated December 18 1997. Regularizing missed, insufficient or delayed payment of taxes through the self-regularization procedure, implies the payment, in addition to the reduced penalty, of legal interests based on a daily calculation starting from the day following the original deadline.
The legal interest to be paid is the one enforced in every single period, therefore:
- 2,5%, up to December 31 2013;
- 1%, from January 1 2014 to the day of payment included.
In example, the regularization of the missed payment of the second instalment of Tax on Corporate Income (IRES), expired on December 12 2013, made on February 10 2014, will be charged with interests according to the following:
- 2,5%, for the period December 11 2013 - December 31 2013;
- 1%, for the period January 1 2014 – February 10 2014.
3.2 Instalment Plans For Amounts Due on the Base of Assessments
The decrease to 1% of interest legal rate is applied also to instalments of amounts due on the base of the following assessment's procedures:
- acceptance to invitations to tax consultations under article 5 of the Legislative Decree nr. 218 dated June 6 1997; interests are charged starting from the day following the payment of the first instalment;
- acceptance to tax audits results under article 5 of the Legislative Decree nr. 218 dated June 6 1997; interests are charged starting from the day following the notification of the partial tax assessment;
- acceptance to tax assessment under article 8 of the Legislative Decree nr. 218 dated June 6 1997; interests are charged starting from the day following the acceptance;
- tax agreement under article 48 of the Legislative Decree nr. 546 dated December 31 1992; interests are charged starting from the day following the agreement's signature.
Crystallization of the legal interest rate
With the Circular Message nr. 28 dated June 21 2011 (§ 2.16), the Italian Tax Agency has clarified that, differently from the procedure mentioned above for the self-regularization, the legal interest rate applicable to instalments related to amounts due on the base of tax assessments, remains unchanged also for the following years. This means that if the assessment is issued in 2013 and the tax payer is given the benefit to pay on instalments, the legal interest rate to be charged will be always 2,5% for the entire duration of the instalment plan.
3.3 Measure of Interests Not Agreed in Writings
The new measure at 1% of the legal interest rate is enforced also for interests not agreed in writings as for:
- amounts loaned as mortgages (art. 45 paragraph 2 of the Tax Law - TUIR);
- interests concurring to form the corporate income (art. 89 paragraph 5 of the Tax Law - TUIR).
3.4 Payment into Instalments Of The Substitutive Tax Due for Re-Evaluation of Participations and Land Properties
In case of re-evaluation of shares not listed in the stock exchange or land properties under articles 5 and 7 of the Law nr. 448 dated December 12 2001 and subsequent modifications, instalments of the substitutive tax applied are not affected by the decrease of the legal interest rate, that remains, therefore at 3%.
3.5 Adjustment of Rations on Usufructs and Life Rents For Indirect Taxation
With a specific Decree the Ministry of Economics will adequate to the new legal interest rate starting from January 1 2014, also the ratio to calculate the value, for register, cadastral, inheritance and charitable contribution taxes of:
- perpetual annuities;
- time limited annuities or pensions;
- life usufructs rights.
4. EFFECTS ON CONTRIBUTION
The decrease of the legal interest rate is effective also for missed or delayed payments for social security and pension contributions under article 116 of the Law nr. 388 dated December 23 2000.
In fact administrative fines can be decreased to the legal interest rate in case of:
- uncertainties on the existence of a contribution's obligation;
- crimes made by third parties;
- corporate insolvency or restructuring involving employees in specific industries;
- companies working in the agricultural industry;
- bankruptcy;
- non-profit organizations.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
