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The Italian Revenue Agency (IRA) issued, on April 16, 2019, the implementing regulation that addresses the self-disclosure procedure of a permanent establishment in Italy for foreign enterprises. This was endorsed in Article 1-bis of Law Decree No. 50 of (April 4, 2017), converted by Law No. 96 of June 21, 2017 (the ‘self-disclosure procedure’).

The self-disclosure procedure provides foreign multinational entities (MNEs) an opportunity to check with the IRA as to whether their operations and activities in Italy amount to a taxable presence for both corporate income tax (a permanent establishment, or ‘PE’) and VAT purposes (a fixed establishment, or ’FE’). If they do, the procedure allows MNEs, through an agreement with the IRA, to attribute an arm’s-length profit to the PE and address any VAT ramifications.

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