“Certificazione unica” return, “730” return and tax wedge

2021 will be a year full of updates for the tax sector: reforms, indemnities, new certifications and a longed-for project of a tax reform. There are so many measures to be implemented and, subsequently, the risk that they will all end up being smoke and mirrors. Giuseppe Bernoni, former chairman of the Italian roll of chartered accountants and founder of the international firm Bernoni Grant Thornton, anlayses some of the most important updates.

Firstly, he analyses the updates concerning the 2021 version of the “Certificazione Unica” and “730” tax returns. «They represent an important update in a year like this – commented Bernoni – and many other updates will concern taxpayers with reference to such returns, as the “110% Superbonus” to be included in the “730” return, the indemnity for income from subordinate employment, the deduction for charitable donations, and the bonus provided by “Cura Italia” Decree for subordinate employees, to be stated in the 2021 “Certificazione unica” return.

In particular, the “730” return takes into account the regulatory updates introduced for FY 2020, including those deductions related to the Coronavirus pandemic. Specifically, the 110% Superbonus and the “holiday bonus” are the main new provisions for taxpayers (both retirees and employees), who will have to fill in and submit the 730 return by 30 September».

“Scrapping” of old tax bills

The so-called “scrapping” of old tax bills can be a further concession for some, and a due measure for others, given the current period. «This is a good initiative – states Bernoni – to relieve taxpayers, who have already been affected by the Covid-19 emergency and by a difficult economic situation. The provision concerns the annulment of irrecoverable or hardly collectable tax bills and the elimination of interest and penalties from 2016 to 2019, as well as the extension of the measure to 2020 and 2021.

This provision certainly does not favour habitual tax evaders, but rather supports taxpayers in difficulty due to the pandemic. It should be enacted in the shortest time possible». Among the new provisions introduced this year, there are also the tax allowances for businesses starting a new activity in special economic areas identified in Southern Italy. Some consider this as another usual temporary stopgap measure for Southern Italy.

Are the tax allowances sufficient or are investments in Southern Italy necessary, for example those in infrastructures or in the exemption from taxation of income for the creation of new jobs? «The provision is logical and effective – states the founder of Grant Thornton— because investment in Southern Italy are fundamental to cover – at least partially – lacks in infrastructures that have affected our country for a long time.

The stated objective is to favour development, thanks to investment and new initiatives implemented in the new ‘special economic zones’, which can benefit from a 50% reduction on income. The allowance is applicable for six FYs at certain conditions (maintenance of the investment and of jobs for 10 years)».

Tax wedge

The cut of the tax wedge for income higher than 28,000 Euro has been officially implemented. Is this income threshold too low? In Italy, those who earn less than 15,000 Euro already benefit from a low taxation and from important safeguard measures. The most affected category of taxpayers is the middle class. Would it be better to increase the tax wedge to income up to 50 thousand Euro? Is the disapperance or weakening of the middle class generally a serious damage for the whole economic and contribution system of a country?

«Hopefully, the current tax wedge cut will be increased up to an income of 50,000 Euro. The reduction in the gap between the gross and the net remuneration of an employee allows moving the cost of labour close to that of other countries.

The increase in the cut would allow companies to implement a more efficient competition, since they are having difficulties even in foreign markets, where competition is higher. It would meet the needs of the middle class, which has been constantly weakened in terms of income pressure and subject to a decrease in living standard for a long time, as it has happened in other countries (such as the USA)».

The plan of a great reform

Last but not least, there is the much promised tax reform plan. 8 billion Euro per year will be allocated for the tax reform, which includes the “unified allowance”, which will be integrated by the resources deriving from the higher tax income that will be allocated in the proper so-called “tax loyalty” provision.

Did you expect something more specific for the tax reform? Can the “tax loyalty” fund be useful or is it still vague project? «The provided allocation for the tax reform equal to 8 billion in 2022 and 7 billion for 2023 is insufficient for many reasons — explains Bernoni.

First of all, such a limited allocation does not allow a complete realization of the reform; secondly, part of the allocated amount will be used as the provided ‘unified allowance for dependent children’, to favour and support families that are most in need with up to € 200 per each child monthly».

And what about the “tax loyalty” fund? «The creation of this fund, on the other hand, represents a change in the strategy of the legislator; in fact, the fund will be created through resources deriving also from the higher amounts generated by spontaneous increases by taxpayers; in other words, the target is the so-called tax compliance. At the same time, the provision for the reduction of the tax pressure created in 2014 has been abrogated.

The tax compliance should be a psychological incentive for taxpayers for a higher fulfilment of tax return obligations. In the past, according to the Director of the Revenue Office Mr. Ruffini, the tax compliance initiative led to the reduction of tax evasion for approximately 5 billion Euros in years 2016-2018, but, in my opinion, in order to be effective, this initiative requires a simplification in the current regulation, which is too much complicated, and in the many fulfilments, which exasperate consultants and taxpayers.

Currently, it is difficult to establish whether the budget law 2021 alone can lead to a more efficient tax compliance, so that the underground sector can be detected. A more clear approach is advisable, because, as it is formulated now, the provision is still vague, and the considerable means and data available to the tax register will allow – as happened in the past – identifying and dealing with existing tax evasion».