Italy: Black lists for cost deduction and CFC regime amended

On 1 April 2015, the Ministry of Economy and Finance issued a press release announcing two Ministerial Decrees amending the black list for cost deduction and the black list for the application of the Controlled Foreign Companies (CFC) regime.

Black list for cost deduction
Expenses and other deductible items related to transactions between resident persons and non-resident entities, located in a jurisdiction that is not included in the white list, are not deductible, unless the resident person proves that:

  • The non-resident entity carries on real business activities; or
  • The relevant transaction had a real business purpose and actually took place

The black list contained in the Ministerial Decree excludes the following jurisdictions: (Alderney, Anguilla, Aruba, Belize, Bermuda, BVI, Cayman Islands, Costa Rica, Gibraltar, Guernsey, Herm (Channel Islands), Isle of Man, Jersey, Malaysia, Mauritius, Montserrat, Netherlands Antilles, Philippines, Singapore, Turks and Caicos Islands and UAE).

Black list for CFC regime
The black list for the application of the CFC regime includes jurisdictions that:

  • do not allow an adequate exchange of information with Italy; and
  • have a level of taxation materially lower than Italy (low-tax jurisdictions).

A low-tax jurisdiction for CFC purposes is defined as a jurisdiction whose level of taxation is lower than 50% of the one in Italy.
The following jurisdictions are excluded:

  • Malaysia
  • Philippines
  • Singapore

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