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Milan Expo 2015 is a Universal Exposition without commercial purposes. Therefore, Circular no.26/E states that "only 20% of the expository space can be assigned to the performance of a commercial activity, such as sale of products, gadgets, as well as catering and organization of paid exhibitions."

Such activities are taxable and, whenever Official and Non-Official Partners perform both commercial activities and their institutional non-commercial activities, the formers will be taxed.

  • Presence of a permanent establishment

In Italy, taxation of income derived from the performance of a commercial activity by a non-resident individual is subject to the presence of a permanent establishment, or branch, which is "a fixed place for business through which a company resident in a State, performs, as a whole or in part, its activity in another State."

Accordingly, if an Official or Non-Official Partner performs a commercial activity in the expository space, a permanent establishment shall be considered established. The Law, in fact, does not provide an unquestionable time limit beyond which the establishment is declared permanent.

Moreover, there is a distinction between a permanent establishment for direct taxation purposes and for VAT purposes. Except for the requirement of stability provided in both cases, in the first one there is only a requirement of suitable structure related to technical elements, while in the second case the suitable structure is related to both material resources and the personnel.

With reference to income and to net production value realized by the organization, the Participant shall accomplish the ordinary accounting, declarative and payment standards provided for IRES and IRAP purposes.

With reference to VAT purposes, the attribution of a VAT number is not enough for proving the existence of a branch by a non-resident subject in Italy with headquarters in another State. In fact, the presence of a branch under these conditions confers to the non-resident subject the status of VAT taxpayer in Italy with limitation to those operations performed or received by the permanent establishment.

Such operations are considered performed in Italy when:

  • they are made to passive subjects established in the State territory and, hence, also to an Italian permanent establishment;
  • they are made to non-taxpayers by taxpayers established in the Italian territory or by an Italian permanent establishment.

It is very important to very whether the operations are made to or received by a permanent establishment in Italy. For instance, if the performance is made by an Italian supplier to a permanent establishment in Italy, the operation is taxable in Italy. If, instead, the supplier provides directly the non-resident subject with the same performance, the operation is taxable in the State where the non-resident subject is located.

Besides, in case of permanent establishment in Italy it is forbidden both to appoint a tax representative and to have a direct identification.

  • Absence of a permanent establishment

VAT fulfilments: If, however, Official or Non-Official Partners perform a commercial activity without the necessary requirements for classifying the organization as a permanent establishment in Italy, they must identify themselves in Italy for VAT purposes, even if they keep their status of non-resident operators.

VAT identification modalities depend on the origin of the parties:

- For EU parties: they can benefit from direct identification or appoint a tax representative according to art.17, sub-par.3 of the Italian Presidential Decree (D.P.R.) n.633 of 1972.

- For extra-EU parties: they can identify themselves in Italy for VAT purposes only through the appointment of a tax representative, charged with the fulfilment of any VAT duty, including tax payment.


Petition to the Italian Tax Administration in case of doubts

For foreign parties it is possible to ask for the opinion of the Italian Tax Administration, in order to make sure the organization taken into account may be considered as a permanent establishment or not for direct and VAT purposes.

If you are interested, you should send a petition of International ruling (on unstamped paper by not packed and registered mail with return receipt) at the following Office: Ufficio Ruling Internazionale - Direzione Centrale Accertamento - Settore Internazionale;

to one of the following addresses:

- Roma, Via Cristoforo Colombo, 426 c/d c.a.p. 00145, Italia;

- Milano, Via Manin, 25, c.a.p. 20121, Italia.