With Law No. 148 of September 14, 2011, the Italian Parliament confirmed Law Decree No. 138 of August 13, 2011, which, as illustrated in our previous alert of August 23, 2011, introduced, inter alia, a surcharge to be applied on income earned by all Italian residents (the so-called contributo di solidarietà or “solidarity tax”) at a 3% rate on any income exceeding Euro 300,000 (whereas, under Law Decree No. 138, it amounted to (i) 5% on any income in excess of Euro 90,000, up to Euro 150,000, and (ii) 10%, for income exceeding Euro 150,000).
Law No. 148 confirmed that the solidarity tax would apply only for the tax periods 2011-2013. However, it also empowered the Italian government to extend its application after 2013 if and to the extent the Italian budget break-even should be achieved at that point in time.
Moreover, the solidarity tax will be deductible from gross income earned in 2012 and 2013.
As illustrated in our previous alert, the rules introducing the solidarity tax overlap with the application of the 10% additional tax on variable compensation paid to certain executives employed in the financial services sector in Italy, the application of which has been extended by the Italian tax administration to certain top executives of industrial holdings (see our previous alert of March 9, 2011), therefore triggering a form of double taxation on such type of income. Law No. 148 does not address this issue but the ministerial decree that will contemplate the detailed features of the surtax and its application (to be issued by October 30, 2011) could.
