Informative Note
The 2016 State Bugdet Bill
08/02/2016
As in previous years, the package of tax measures for 2016 is spread between various pieces of legislation and the 2016 State Budget Law serves to complete the measures already announced and in force since the beginning of the year.
In truth, besides the tax measures in force since the beginning of the year, including the reduction of the surcharge and the maintenance of the additional road tax (IUC), the next few months will see a discussion on measures such as the family quotient or the reduction in VAT for restaurants.
The package of measures presented demonstrates that the Government does not intend to continue with the process of reducing the rate of corporate income tax. In any case, amendments are proposed to the participation exemption regime, which make it difficult to eliminate economic double taxation for long-term investors, particularly in the cases of companies with a great dispersal of share capital (such as financial institutions or other quoted companies). This is because of the increase from 5% to 10%in the holding necessary for the regime to apply. However, at the same time, the structuring of some speculative transactions has been made easier by reducing the minimum holding period for access to the participation exemption regime from two years to one year.
The 2016 State Budget Bill does contain other significant changes. These include measures involving a technical revision of legislation, in many cases based on long-standing opposition to certain provisions on the part of the Tax and Customs Authority (“AT”). These include the case of the elimination of the possibility to request an official review of a self-assessment, or the changes made in terms of the possibility to waive the VAT exemption in the health sector. At the same time, measures are proposed to speed up the payment of debts in instalments, prior to and after beginning tax enforcement proceedings, as long as certain conditions are met.
In conclusion, the result of the 2016 State Budget Bill is that there are no clear tax cuts and the tax efforts of recent years are maintained. In this respect, there has been a clear choice to increase the relative weight of excise duties and other indirect taxes rather than increasing the burden of personal income tax. This choice seems to be in line with the economic model that has been introduced to boost growth through domestic consumption by families.
Read about the main legislative changes and innovations of the 2016 State Budget Bill here.
