Investment in Italy

Investment in Italy• 6 percent for other relatives, with no tax exemptions• 8 percent for beneficiaries not related to the donor or the bequeather, with no taxexemptions.When real estate is inherited or gifted, cadastral tax and mortgage tax are applicable at therates of 1 percent and 2 percent respectively. If the real estate is represented by the principaldwelling, the cadastral and mortgage taxes are substituted by a fixed tax of EUR 168.00.6.7International aspects6.7.1ExpatriatesIndividuals will be taxed on a notional salary if they are tax resident in Italy but are employedand live outside Italy for the greater part of the tax year.The notional salary is established each year in a decree issued by the Italian Ministry ofLabour and Social Security, and is normally used as a basis for paying Italian social securitycontributions when an Italian employee is seconded to a non-social security treaty country.Italian employers have to levy withholding taxes on the monthly notional salary for theirItalian employees working abroad and all the benefits linked to the foreign employment aredeemed to be included in the notional salary. Consequently, it may be possible that an Italianemployee seconded abroad is subject to double taxation (in Italy and in the host country).However, double taxation can be avoided through the tax credit mechanism.These rules do not apply to Italian employees who are seconded abroad and who are nolonger Italian tax residents.6.7.2Double taxation reliefResident individuals are subject to individual income tax on their worldwide income. In orderto avoid international double taxation, a foreign tax credit is granted to residents with foreignincome.Such foreign taxes may be credited up to the amount of the IRPEF due on the same income,based on the ratio of foreign income to total income (net of any tax loss carryforwards).If foreign income is derived from more than one country, the foreign tax credit is appliedseparately with respect to each country (i.e. on a per country basis).The credit must be claimed, upon penalty of forfeiture, in the tax return for the tax yearin which the foreign taxes are definitively paid. According to the tax authorities, a tax isdefinitively paid when no partial or total reimbursement may be obtained.No credit is granted in the event of failure to file a tax return or to report income producedabroad in the tax return. No tax-sparing clause is available at the domestic level.© 2012 KPMG S.p.A., KPMG Advisory S.p.A., KPMG Fides Servizi di Amministrazione S.p.A., KPMG Audit S.p.A., Italian limited liability share capital companies, and Studio Associato Consulenza legale e tributaria, anItalian professional partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.65