Ecovis in Shanghai
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We of ECOVIS Ruide Shanghai particularly customized our advisory activities to the requirements of internationally active enterprises. We work independently, objectively and absolutely reliably. Significant for our partnership with our clients are mutual trust and the long-term personal consultation and support.
International tax, audit, accounting and legal news
Tax residence Italy: Revisions to identifying the tax residence of natural and legal persons
31.05.2024As of 1 April 2024, there are new rules on international taxation in Italy, especially concerning the identification of the tax residence of natural and legal persons. This is regulated in Legislative Decree 209/2023. The Ecovis experts explain who will be considered tax residents in Italy in the future.
Specifically, article 1 introduces important revisions concerning the criteria and methods for determining the tax residence of natural persons under the consolidated rules laid down in article 2 of the General Income Tax Code (Decree 917/1986 (TUIR)).
Changes relating to the tax residence of natural persons
As a result of the amendment, persons are now considered to be tax residents in Italy if, for the majority of the tax period (calendar year), they fulfil one or more of the following circumstances and conditions:
- have their residence in the territory according to the Civil Code, and/or
- are domiciled in the territory and/or
- are physically present in the territory
These conditions are alternative, with the consequence that just one of them is sufficient to constitute a condition of tax residence in Italy. Unless proven otherwise, persons registered for the majority of the tax period in the resident population register (anagrafe) are also presumed to be tax residents. Fractions of a day, public holidays, and the day of arrival and departure must also be considered when calculating residence.
The recent tax reform follows the definition of residence as formulated by article 43 of the Italian Civil Code: the place where the person has his or her “habitual home/dwelling”. Tax residence is established even if there is no continuity or finality of the habitual home, with the consequence that even prolonged periods of absence will not exclude persons from residence in Italy for tax purposes.
The definition of tax residence
For domicile, on the other hand, an “ad hoc” definition is provided identifying tax residence as the “place where the taxpayer’s main personal and family relationships are established”. This is the main change compared to previous regulations, as the new rules prioritise personal and family interests over patrimonial interests to identify and define the centre of personal interests.
Another important revision is the introduction of the rule of physical presence. In the absence of specific indications, it seems that this must be interpreted literally and tax residence is now also determined based on the actual days spent in the territory, independently of other formal links such as civil residence or domicile.
Finally, the rule of registration in the civil registry continues to apply, although now as a rebuttable presumption rather than an absolute condition. Mere registration can now be challenged by demonstrating the absence of connecting factors established by national legislation.
We would recommend and are available for analyses and case-by-case assessments of where you and your company are tax resident.Emilio Martinotti, Certified Public Accountant and Tax Partner at ECOVIS STLex, Turin, Italy
Dealing with double taxation
If the application of the Italian rules and those of a foreign state lead to a case of dual residence, the decisive criteria provided for in art. 4(2) (tie breaker rules) of the OECD model apply, in hierarchical order:
- Permanent dwelling (1st rule)
- Centre of vital interests (2nd rule)
- Place of habitual residence (3rd rule)
- Nationality (4th rule)
- Agreement between states (residual criterion)
The decree maintains the presumption of residence for Italian citizens who move to states or territories with a privileged tax regime, as outlined in article 2, paragraph 2-bis, of the TUIR. Switzerland has been removed from the list of countries with privileged taxation.
Changes to the tax residence of legal entities
Under the previous legislation, the residence of companies and entities was determined based on the existence of the registered office, the seat of administration or the main business object in the territory for the majority of the tax period.
With the new legislation, the following definitions apply, in addition to the time requirement (the majority of the tax period):
- location of the registered office
- location of the place of effective management
- Location of the place of main ordinary management
The criteria for legal entities will be looked at in depth in a separate article.
For further information please contact:
Emilio Martinotti, Certified Public Accountant and Tax Partner at ECOVIS STLex, Turin, Italy
Email: emilio.martinotti@ecovis.it
E-invoice Germany: Mandatory for businesses subject to VAT in Germany from 2025
29.05.2024The federal government has made it mandatory to create and receive electronic invoices from 2025. This affects all businesses subject to VAT in Germany. The Ecovis experts briefly explain what needs to be considered.
What are e-invoices?
E-invoices are invoices in a specific, legally regulated data format. A PDF file is not considered an e-invoice. This means that every business must meet the technical requirements to be able to issue and receive e-invoices by 2025. The new regulation only provides for the exchange of e-invoices between business partners. It is not a clearing procedure.
Who must receive and issue e-invoices?
The new regulation affects:
- Companies that have their headquarters, their management or a permanent establishment generating revenue in Germany or
- Entrepreneurs who have their domicile or habitual residence in Germany
An e-invoice must be issued for sales to domestic businesses. There are exceptions for small-value invoices, travel tickets and tax-free sales (according to Section 4 Nos. 8 to 29 of the VAT Act) (UStG).
We can support you in the short-term implementation of e-invoicing, with which you can expect efficiency gains in the future.Marion Dechant, Tax Advisor, ECOVIS Wirtschaftstreuhand GmbH
Auditors, Munich, Germany
What are the deadlines?
There are temporary transitional regulations. Paper and PDF invoices will be allowed up to and including 2026. For 2027, this will only apply if the issuing business did not achieve revenues of more than EUR 800,000 in 2026 (within the meaning of Section 19, Paragraph 3 UStG). In addition, there is a special transitional regulation for PDF invoices using the EDI process.
Although there are transitional regulations and exceptions for issuing them, every business must be able to receive and process e-invoices from 2025. This applies regardless of whether the business already issues e-invoices itself. The decisive factor is what the supplier does. Businesses must identify themselves as such when purchasing. Only then the supplier can issue a proper e-invoice and the buyer will be permitted to deduct input tax.
For further information please contact:
Marion Dechant, Tax Advisor, ECOVIS Wirtschaftstreuhand GmbH
Auditors, Munich, Germany
Email: marion.dechant@ecovis.com
Minimum wage Greece and other new developments in labour relations
27.05.2024Greece has introduced new regulations concerning employment relationships, some of which have already come into force or will come into force later this year. The measures include setting the minimum wage for 2024 and the introduction of a digital work card. The labour lawyers at Ecovis know what companies must prepare for.
Setting the minimum wage for 2024
On 31 January 2024, a bill was submitted to parliament that includes the determination of the minimum wage for 2024. More specifically, and especially for 2024, deadlines have been established for conducting the consultation outlined in Article 134 of the Code of Individual Labour Law (Presidential Decree 80/2022). These deadlines concern setting the value of the statutory minimum wage and daily wage.
Following consultation with all social partners, the Minister of Labour and Social Security recommended to the Council of Ministers on 29 March 2024 that
- the statutory minimum wage for full-time employment for employees nationwide whose remuneration is not regulated by a collective labour agreement be adjusted without age discrimination from EUR 780 to EUR 830 and
- the statutory minimum daily wage for manual workers across the country from EUR 34.84 to EUR 37.07.
The new minimum wage and the new minimum daily wage apply from 1 April 2024. It should also be noted that the increase in the minimum wage will also result in a corresponding increase in allowances, benefits and subsidised schemes.
We support you in implementing the new employment law regulations.Grace Ch. Katsoulis LL.M., Partner, BALLAS, PELECANOS & ASSOCIATES L.P.C., Athens, Greece
Implementation of the digital work card system for additional business types
According to Ministerial Decision 113169/2023, as of 1 January 2024, the compulsory use of the digital work card system is extended to include companies mainly active in industry and retail. These businesses will be obliged to establish and implement a digital work card system for all employees with a contract or a dependent employment relationship who are physically present at the business, including those working on an employee borrowing basis. Enterprises operating in the energy, petroleum, and mining sectors are exempt from this obligation. Failure to implement the digital work card system will result in administrative penalties, as outlined in Ministerial Decision no. 80016/31-08-2022.
Digital work-card: Extension of the date of imposition of penalties for non-compliance
Pursuant to Ministerial Decision 24595/2024 of 29 March 2024, administrative sanctions for failure to implement the digital work card system resulting from Ministerial Decision no. 80016/31-08-2022 will be imposed as of 1 July 2024, instead of:
- 1 April 2024 for enterprises in the industrial sector
- 2 May 2024 for enterprises in the retail sector
- 13 May 2024 for both the above sectors when their workforce consists of up to 10 employees
In practice this means that the digital work card obligation for businesses in the industrial and retail trade sectors commences on 1 July 2024.
Reduction of the salary threshold for managerial employees
From 1 March 2024, there will be additional changes concerning the classification of managerial employees, along with adjustments to their salary thresholds. Specifically, under Part B of Ministerial Decision no. 90972/15-11-2021, individuals identified as managerial employees now includes those authorised to make autonomous decisions.
In addition, the monthly remuneration limit for executives falling under Category B is revised from six to four times the minimum statutory salary (currently EUR 3,120.00). Executives in Category C will now have a monthly remuneration limit of six times the minimum statutory salary (EUR 4,680.00), instead of the previous eight times. The determination of managerial status in ERGANI II is established during the recruitment process by submitting a declaration of basic conditions of employment.
For further information please contact:
Grace Ch. Katsoulis LL.M., Partner, BALLAS, PELECANOS & ASSOCIATES L.P.C., Athens, Greece.
Email: grace.katsoulis@balpel.gr