International Tax Focus - 10 and 11 2025

International Tax News Italy - Monthly update

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The Monthly Update newsletter summarizes the most relevant cross-border tax novelties of September and October 2025 from a domestic, European and international perspective.

Among the main topics:

- tax treatment of deferred compensation under the in-bound workers regime;

- DAC 8 implementation, Crypto-asset reporting and data exchange updates;

- implementation and transposition of DAC 9;

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Exclusion of monthly unemployment allowance from the inbound workers regime

According to the ruling no. 228 issued by the Italian Tax Authorities on 1 September 2025, amounts paid by the State as an allowance for periods where an individual is unemployed do not fall within the scope of the former in-bound workers regime provided for by Art. 16 of Legislative Decree 147/2015 and must therefore be fully subject to taxation.

The allowance referred to above – so called ‘New Social Insurance Benefit for Employment’ – is a monthly unemployment allowance that provides income support to employees who have involuntarily lost their jobs.

These amounts are therefore not paid in exchange for performing work activities but rather due to the termination of the employment relationship; consequently, they are not eligible under the inbound workers regime, which is intended to incentivize the performance of work activities in Italy.

Tax treatment of deferred compensation under the in-bound workers regime

Ruling no. 274, issued on the 29 October 2025, by the Italian Tax Authority addressed the taxation of amounts received as deferred compensation, specifically bonuses accrued for work performed in Italy by individuals who later relocated to Greece and received the bonuses after becoming Greek tax residents.

From a territoriality perspective, the connection to Italy must be assessed with reference to the vesting period (i.e., the period during which the right accrued) and not to the period of payment (when, in this case, the individuals had already become non-residents), which merely represents the time when such income is actually subject to taxation.

Since the amounts relate to activities carried out in Italy, they are therefore taxable in Italy.

The Italian Tax Authorities also denied the benefits of the in-bound workers regime on the reasoning that Restricted Stock Units (RSU) and other equity incentives accrued during the period when the individual was resident and working in Italy but granted in a subsequent year – when the worker had moved abroad and become resident in another State – cannot benefit from the regime’s tax relief (as the worker is not tax resident in Italy where the amounts become taxable).

DAC 8 Implementation: Crypto-asset reporting and data exchange updates

On 8 October 2025, the Italian Council of Ministers approved the draft Legislative Decree implementing Directive 2023/2226/EU (DAC 8), concerning the automatic exchange of data on crypto-assets.

The directive and the implementing decree also include certain amendments relating to rulings for individuals.

Further changes are introduced to the procedures for the automatic exchange of financial account data, aimed at identifying cases where non-resident shareholders hold accounts in Italy through legal entities over which they maintain control.

Implementation and transposition of DAC 9  

Published in the Official Gazette No. 252 on 29 October 2025, the Ministerial Decree of 16 October 2025 sets out the implementing provisions regarding reporting obligations on top-up taxation and the transposition of Directive 2025/872/EU, which extends automatic exchange of information to GIR - Globe Information Returns - related to the global minimum tax.

The decree addresses three key aspects:

·       the content of the relevant communication and the procedures and conditions for its submission, including for entities applying the transitional simplified jurisdictional reporting framework;

·       the transposition of Directive 2025/872/EU (DAC 9), which provides for the automatic exchange of these communications within the EU within three months after the filing deadline;

·       the standard communication template, designed to ensure a common set of information and a consistent, uniform approach across jurisdictions implementing the global minimum tax, while facilitating compliance for multinational groups operating in multiple countries.

Simplifications established for the duty-free reintroduction of previously exported goods

Circular no. 28 of 23 October 2025 issued by the Customs and Monopolies Agency simplifies and harmonizes certain procedural aspects related to the simplifications for the duty-free reintroduction of previously exported goods, both in Business-to-Business (B2B) and Business-to-Consumer (B2C) contexts.

The circular:

·       provides clarifications on the verification of requirements necessary to access the simplification;

·       specifies the timelines for handling the administrative process;

·       streamlines the procedure by introducing an annual renewal mechanism for the granted simplification, if proposed by the local office following a positive monitoring outcome;

·       revises the parties involved in the administrative process and their respective roles.

Agency contracts and VAT: the ECJ clarifies the territorial scope

In its judgment of October 9, 2025, in Case C-101/24, the European Court of Justice ruled on the conditions for applying Art. 28 of Directive 2006/112/EC. Under this provision, where a VAT person acts in their own name but on behalf of another party and participates in a supply of services, they are deemed to have received and supplied those services personally.

In essence, the rule establishes a legal fiction of “two identical services supplied consecutively” whereby the agent is considered first to have received the services from the principal and then to have supplied them personally to the customer.

The Court noted that applying this legal fiction under Art. 28 of Directive 2006/112/EC does not affect the determination of the place of supply for VAT purposes.

VAT on factoring services: ECJ clarifies debt recovery treatment

In its judgment in Case C-232/24 on 23 October 2025, the European Court of Justice ruled on the VAT treatment of services provided by a factoring company.

The company offered factoring services partly through pledges and partly through the sale of receivables, charging among other things:

·       a financing commission, calculated also based on the risk assumed by the factor;

·       fees for opening the files.

The Finnish tax authority considered both the financing commission and, in part, the opening fees to be exempt from VAT as financial services.

The Court, however, held that both amounts constituted consideration for a single debt recovery service subject to VAT because Art. 135(d) of Directive 2006/112/EC, while providing VAT exemption for transactions relating to credit, excludes debt recovery from VAT exemption.

Member States update EU list of non-cooperative tax jurisdictions

On 10 October 2025, the Council of the European Union confirmed, without modifications, the EU list of non-cooperative tax jurisdictions, which therefore continues to include the same 11 jurisdictions as the previous version: Anguilla, Russian Federation, Guam, Fiji Islands, U.S. Virgin Islands, Palau, Panama, Samoa, American Samoa, Trinidad and Tobago, and Vanuatu.

During the meeting, decisions were also taken regarding the signing of protocols amending agreements on the automatic exchange of financial information between the European Union and Andorra, Liechtenstein, Monaco, San Marino, and Switzerland.

These amending protocols aim to extend to the original agreements the changes introduced in 2022 to the Common Reporting Standard, with the goal of including among monitored assets certain electronic money instruments and central bank digital currencies, as well as indirect investments in crypto-assets through derivatives and investment vehicles. August 2025, ruled that the VAT in excess charged to a non-VAT person is not to be collected and paid by the supplier, since there is no risk of loss of tax revenue.