IN-DEPTH GUIDE TO THE NEW PRODUCTION INITIATIVE SCHEME

Transcription

1 IN-DEPTH GUIDE TO THE NEW PRODUCTION INITIATIVE SCHEME BY BIC SARDEGNA SPA 1

2 LIST OF CONTENTS INTRODUCTION... 3 REQUIREMENTS... 3 THE ACTIVITY SECTORS AND INELIGIBLE COMPANIES... 3 THE DURATION OF THE FLAT-RATE SCHEME... 4 THE SIMPLIFICATION OF ACCOUNTING AND TAX REQUIREMENTS... 4 THE TAX BENEFITS

3 INTRODUCTION This guide is intended to help you understand if your business can take advantage of the new productive initiative taxation scheme. REQUIREMENTS The new production initiative scheme was approved by Article 13 of Law 388/2000, the full text of which is available at the following link: For eligibility purposes, a number of set requirements are to be complied with. In a nutshell: the legal form should be that of the sole proprietorship; the turnover must not exceed EUR 30, (for service providers) or EUR 61, (for other activities) on a yearly basis; the company must have not performed business activities or selfemployment during the previous three years before VAT registration; the company must not be simply carrying on an activity started previously, including in other corporate forms; if you have taken over the company of another entrepreneur, the turnover of the previous year must not exceed EUR 30, (for service providers) or 61, (for other activities). The term "turnover" refers to the revenues derived from the sale of goods and services, duly registered and subject to the application of IVA/VAT (Value Added Tax). For further information on how the Italian VAT system works, please read the Guide to VAT. For instance, if you have taken over the company of another entrepreneur and the during previous year the company had totalled EUR 25,000, you can benefit from the new production initiative scheme. THE ACTIVITY SECTORS AND INELIGIBLE COMPANIES The new production initiative scheme is not available if the company works in one of the following sectors, which are already governed by special regulations: agriculture and fishery; sale of matches; sale of tobacco and salt; 3

4 public telephone services; sale of tickets for public transport or coupons for parking; publishing industry; games and entertainment; auctions of antiques, collectors' pieces and objects of art; doorstep sale; farm holiday centres; travel agencies. If you do not live in Italy, you cannot benefit from the new production initiative scheme. THE DURATION OF THE FLAT-RATE SCHEME No age restriction is applied to the flat-rate scheme. Moreover, the scheme can be applied for 3 years in a row, starting from the date when the activity started. The actual beginning of business activity, no matter the date on which the VAT number was registered, is the date when the first good is sold or the first service is provided. Here's an example: if you start your own business in 2015, you shall be able to enjoy the benefits of this tax scheme until the end of When you contact the Inland Revenue to register the VAT number, make sure you tick the relevant box to select this scheme. THE SIMPLIFICATION OF ACCOUNTING AND TAX REQUIREMENTS A significant advantage that is available for business operators, is the utmost simplicity of accounting and tax requirements. Under the new production initiative scheme, the manager is not required to: register purchase documents; register sales documents; register any consideration; pay the VAT down payment. 4

5 In addition, it provides the possibility to not pay in full or in part VAT on a periodical basis. For further information on this topic, please refer to the Guide to VAT. You just need to make sure to: number and keep the documents of purchase and the documents of sale; issue invoices and certify all considerations; if due, pay the IRAP tax and the substitute tax; contact the Customs Offices to fulfil their obligations provided by the law, if sales or purchases are made in other EU countries; fill in and submit the sector studies forms; if your company possesses capital goods, keep an assets book. In this case, the term capital goods refers to those assets which may be used to perform business activities for more than one year. It refers to furniture, equipment, computers, vehicles, company premises and so on. For further information on the functioning of sector studies, please refer to the following link: settoreparametri/studisettore/schedaistudisett. THE TAX BENEFITS Tax benefit-related advantages are also provided for by the new production initiative scheme. An entrepreneur who decides to apply to this scheme: pays the VAT with a single annual payment, not with a number of periodical ones; has a 10% tax rate on the corporate income tax (substitute tax). Note that, should the company fail to comply with at least one of the above-mentioned requirements during its business activities, this special scheme may not be applied any more. 5