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The Italian Tax Authorities published, on 26 January, the final version of the interpretative Circular Letter on hybrid mismatch arrangements rules, as governed by Legislative Decree 142/2018 that implements the EU’s anti-tax avoidance directives through domestic Italian legislation and that also considers the OECD BEPS report(s) on Action 2.

Action Item: Considering that the Hybrid Rules target cross-border scenarios, both Italian and foreign multinationals should consider their potential impact as currently interpreted by the Circular. They should analyze their position for Italian tax purposes and consider the benefits deriving from the drafting of the hybrid dossier as a means of managing “hybrid” risk in Italy and potential criminal penalties.