A Review of Italy’s Draft Pillar Two Law

Overview

On September 11, 2023, the Italian Ministry of Finance issued a draft law for the implementation of the EU Global Minimum Tax Directive (the ‘EU Directive’). The draft law is subject to a consultation until October 1, 2023.

As provided in the EU Directive, the draft law includes an income inclusion rule (IIR) and an under-taxed profits rule (UTPR). 

The IIR is to apply to financial years beginning on or after December 31, 2023. The UTPR will generally apply to financial years beginning on or after December 31, 2024.

A domestic minimum tax (intended to be a Qualified Domestic Minimum Top-Up Tax (‘QDMTT’)) is also proposed to apply for financial years beginning on after December 31, 2023.

General