Reduced Taxes up to 50% with Preventive Arrangement: Who Benefits?

Changes in Tax Regulations for Concordato Preventivo Biennale

A new decree regulating the biennial preventive agreement introduces significant changes in the tax rules for individuals adhering to this arrangement with up to 50% reduced taxes.
This decree comes as a relief for VAT holders, self-employed workers, and professionals who were concerned about the potential impact of income adjustments based on Isa indexes.

Key Points of the Decree on Biennial Preventive Agreement

Starting from June 15, 2024, VAT holders, self-employed workers, and professionals can opt for the biennial preventive agreement.
The main objective of the new regulations is to alleviate the effects of income adjustments based on Isa indexes.

Details of the Implementing Decree for Biennial Preventive Agreement

The implementing decree, signed by Deputy Minister Maurizio Leo, includes 8 articles, introducing crucial changes to the calculation of taxable income.
The most significant amendment is outlined in Article 7, aiming to facilitate a gradual transition to a fully reliable tax compliance level.

For the tax period ending on December 31, 2024, the determination of incomes subject to the biennial preventive agreement will consider the declared income for the tax period ending on December 31, 2023, and 50% of the additional income identified by applying the already approved criteria.

Reductions in Taxable Income for Biennial Preventive Agreement

In specific situations (Article 5 of the implementing decree), additional reductions in the income forming the basis of the agreement are foreseen:

• 10% reduction in income subject to the preventive agreement for extraordinary events leading to a business suspension lasting 30 to 60 days.
• 20% reduction in case of business interruptions lasting between 60 and 120 days due to exceptional events.
• 30% reduction if the business suspension exceeds 120 days.

Exceptional Circumstances and Disapplication of the Agreement

The decree also expands the exceptional circumstances that may result in the agreement with the Tax Office being disallowed:

• Natural disasters triggering a state of emergency declaration.
• Ordinary liquidation processes or administrative/judicial forced liquidations.
• Leasing of the business.
• Administrative business suspensions reported to the local Chamber of Commerce.
• Professional activity suspensions reported to the relevant professional association.

These changes provide a more nuanced and flexible framework for individuals opting for the biennial preventive agreement, offering relief and clarity in tax obligations.