Advance tax ruling
- AT A GLANCE - ADVANCE TAX RULING
Aim: give taxpayers the possibility to obtain a preventive and written opinion by the Italian Revenue Agency providing the correct application of specific tax provisions.
Qualifying persons: both resident and non-resident taxpayers are entitled to forward the query to the Italian Revenue Agency. The query has to be submitted before the application of the tax provisions.
Benefits: the Italian Revenue Agency cannot issue assessments or impose fines or penalties that would be in contrast with the opinion expressed in the advance ruling.
What is it
The advance ruling is a "tax compliance institute" allowing taxpayers to orient their behavior and, consequently, to prevent litigations with the Revenue Agency. Essentially, resident and non-resident taxpayers can submit to the Italian Revenue Agency formal queries to obtain clarifications on the correct application of a specific tax provision.
Who can submit a query
Both resident and non-resident taxpayers (directly or by means of their elective representatives in Italy) are entitled to forward a query to the Italian Revenue Agency. The Italian Revenue Agency can accept a request for an advance ruling only when taxpayers require clarifications about a tax provision:
- whose interpretation is objectively uncertain
- relating to state (and not local) taxes
- applicable to a real (not hypothetical) and personal case
The request must be submitted before the relevant tax provision is applied (for example, before submitting the tax return, before applying a withholding tax, before issuing an invoice, etc.).
The opinion expressed by the Revenue Agency in the advance ruling is not binding on the taxpayer, however, it is binding on the Revenue Agency, that cannot issue assessments or impose fines or penalties that would be in contrast with the opinion expressed in the advance ruling.
The Revenue Agency has 90 days to reply to the query and other 60 days if, in the meantime, asks further clarification or documents to taxpayers to form its opinion. If the Revenue Agency doesn't answer within the time limits, the taxpayer's interpretation is deemed to be accepted on the basis of a tacit consent.
How to submit a query
Taxpayers requesting an advance ruling have to submit a query, signed by the taxpayer or by his/her authorized representative, containing the following information:
- type of ruling required
- identification details of the taxpayer or of the representative (tax identification number, Vat number, address, contacts, including telefax or phone number, email address)
- detailed description of the case that raises the interpretative issue, with identification of the objectively uncertain provision the taxpayer needs to apply and the solution proposed by the taxpayer
- mandate or power of attorney, in case the query is not submitted by the taxpayer himself.
In the event that the request is lacking the above data, other than those related to the identification of the applicant and the accurate description of the case, the Office gives the taxpayer the opportunity to correct those deficiencies. The missing information must be provided within 30 days.
Generally, taxpayers, including permanent establishments, have to submit advance ruling queries to the Regional Directorate competent for the area where the taxpayer is domiciled for tax purposes.
Non-resident taxpayers and large taxpayers, including permanent establishments – with a turnover not below 100 million euro – have to submit their queries to the Taxpayers' Division (certified email: email@example.com).
Queries may be submitted by:
- hand delivery at the headquarters of the competent Regional Directorate, that is, at the Taxpayers’ Division in Via Giorgione, 106 - 00147 Rome from Monday to Friday, from 9:30 a.m. to 1:00 p.m.)
- registered mail with return receipt
- certified mail (PEC)- addresses
- by email - only for non-resident taxpayers which do not have an address for service in the territory of the State - to firstname.lastname@example.org
In the case of electronic transmission, the ruling must be signed with a digital signature or, if signed with a handwritten signature, it must be completed with a copy of an identity document.
Types of Advance tax rulings
- Ordinary ruling: Every taxpayers, including non-residents, may submit a query to obtain an opinion about the correct interpretation of an objectively uncertain tax provision or in case the objective uncertainty is related to the legal and fiscal qualification of a specific case. The interpretation of a tax provision is "objectively uncertain" when there is no official interpretation available (circular letters, resolutions, etc.) that applies to the taxpayer's specific case or when such official interpretation is too generic.
Official interpretative documents are available here - (IT).
- Probatory ruling: taxpayers can request an opinion about the fulfilment of the conditions and the assessment of the probatory elements required for the adoption of specific tax regimes, in cases expressly provided by law;
- Anti-abuse ruling: taxpayers can ask an opinion about the application of the “abuse of right” principle to a specific case, aiming at verifying if a transaction may be considered as abusive;
- Anti-avoidance ruling: it is the only mandatory ruling in order to fight tax avoidance. It is aimed at the disapplication of tax provisions limiting deductions, tax benefits, tax credits or other subjective positions of the taxpayer.