The digitalization of the economy has raised the need to adopt a notion of permanent establishment different from the one traditionally accepted.
In this regard, the Italian legislator has introduced a new notion of permanent establishment which is triggered when a non-resident enterprise has “a significant and continuous economic presence in the territory of the state constructed in such a way that its physical presence in the territory is not apparent” (art. 162, par. 2, let. f-bis, TUIR).
Such a permanent establishment is triggered when the non-resident enterprise sells to Italian clients and realizes a turnover in the Italian market, no matter the existence of a physical presence of the same in Italy. According to part of the Italian legal theory, the above-mentioned notion of permanent establishment, as an anti-elusive nature as the same has been introduced in order to intercept non-resident enterprise economic activities organized in order to circumvent a physical presence in Italy.
However, it seems that the operation of a non-resident enterprise cannot trigger the above-mentioned type of permanent establishment if and to the extent such enterprise is resident in a State that has entered into a Convention for the avoidance of double taxation with Italy. In fact, such a kind of permanent establishment is not provided by the Conventions for the avoidance of double taxation, enter into by Italy, as the same are based on the OECD Model Tax Convention.
In this regard, some Conventions for the avoidance of double taxation (such as the one in force between Italy and San Marino) establish that the conventional benefits cannot limit “the enforcement of domestic provisions designed to prevent tax evasion and tax avoidance”. Therefore, should the Italian tax authorities and/or jurisprudence adopt the anti-elusive interpretation of the above-mentioned new notion of permanent establishment, this would mean that such new type of permanent establishment could also be triggered by an enterprise residing in a State that has entered into a Convention for the avoidance of double taxation with Italy, which preserves the application of domestic rules against tax evasion and tax avoidance.
The Professionals of Bacciardi Partners are available to assist foreign enterprises in verifying whether the activities carried out by the same on the Italian territory trigger a permanent establishment on the basis of the applicable Italian and conventional regulations.