Tax Law

1. ITA.
New Law: Enactment Of 2000 Budget Law Connected Tax Reform ("Tax Reform"). On November 9, 2000, the Italian legislature finally passed the much anticipated Tax Reform which provides for a variety of new tax treatments affecting individuals, partnerships and corporations, whether domestic or internationally based. The above provisions involve amendments to the Income Tax Law, Value Added Tax, Inheritance and Gift Tax and other minor taxes.

The most important provisions include:

1. Control Foreign Corporation legislation which sets forth a presumption whereby income produced in tax havens is considered as produced in Italy for income tax purposes;
2. Subject to certain restrictions, the 95% income tax exemption currently provided for dividends distributed within the European Unity only will be extended to dividends distributed by non-European subsidiaries to Italian mother companies;