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The Italian Tax Authorities launched on 18 October, a public consultation on the draft interpretative Circular Letter, which, at 111 pages, covers the application of the hybrid mismatch arrangements rules as governed by Legislative Decree 142/2018 that implements the ATAD Directives through domestic Italian legislation. 

Action item: The public consultation is an opportunity to participate in the legislative process and share operational and technical views on this complex and innovative legislation. Interested parties are invited to provide comments by 19 November 2021.

Considering that the Hybrid Rules are aimed at targeting cross-border scenarios, both Italian and foreign multinationals should consider their potential impact as currently interpreted by the Draft Circular. Taxpayers also should proactively analyze their position for Italian tax purposes and develop proper documentation of the analysis in case of an audit.