Italy: Update on defining “permanent establishment” - KPMG Global
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Italy: Update on defining “permanent establishment”

Italy: Update on defining “permanent establishment”

The draft budget law 2018 includes new measures reflecting a broader definition of “permanent establishment” (PE) for Italian law. The proposal would make the definition of PE more consistent with how the term is defined in the final report under the OECD’s base erosion and profit shifting (BEPS) Action 7.


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The Italian amendment would:

  • Extend the agency PE definition
  • Make the “negative” list conditional on the taxpayer proving the preparatory or auxiliary nature of the activities
  • Include the “anti-fragmentation rule”

The budget law measures may be subject to amendment during the legislative process, prior to its final approval expected by 31 December 2017.


Read a December 2017 report [PDF 161 KB] prepared by the KPMG member firm in Italy

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