Assets granted to shareholders

Subject: 30 OCTOBER DEADLINE FOR THE REPORT ON ASSETS AND LOANS 2014

As last year, the deadline for filing the report relating to the following falls on the thirtieth day after the deadline for filing income tax returns:

• assets made available by the company to its shareholders;
• assets made available by the company to shareholders’ family members;
• assets made available by the company to shareholders or family members of another company belonging to the same group;
• assets used by the entrepreneur’s family members.

As clarified by Circular no. 24/E/2012, the family members of the entrepreneur and of the shareholders are identified under art. 5, paragraph 5 of the TUIR and, accordingly, are “the spouse, relatives up to the third degree and in-laws up to the second degree”.

Therefore, since for most taxpayers the deadline for filing the Unico return was last 30 September, the report concerning loans and the use of assets must be sent by 30 October 2015.

Reporting of assets

Taxpayers – company / shareholders or family members / business – must report the assets owned by companies or businesses that are made available for use to shareholders or family members. The report concerns assets used in 2014 (even for only part of the year), even if the grant began in earlier years.

The form must state:

• the type of asset made available for use
• the data relating to the asset (e.g. chassis number for cars, cadastral code for real estate)
• the normal value of use (for cars, reference must be made to the conventional benefit provided for by art. 51 of the TUIR)
• any consideration paid for the use.
• Information is then also required on:
• the use made of the asset;
• the duration of the grant (start and end dates).

It is confirmed that there is no reporting obligation when the assets made available for private use jointly meet two requirements:

• they have a value not exceeding 3,000 euro, net of VAT (note that the reference is to the value of the asset, not to the annual value of its use);
• they fall within the residual category “other” provided for by the decree (i.e. they must be assets other than cars, pleasure craft, aircraft, real estate).The report is required when the shareholder uses the asset without paying an appropriate consideration and therefore miscellaneous income (under art. 67 of the TUIR) arises, to be taxed in the hands of the user. If, on the other hand, an appropriate consideration is agreed, the report is not due.
• Certain objective exclusions are also provided for:
• This means that there is no need to monitor private use of assets of minor importance (e.g. a pneumatic hammer or a small concrete mixer, or a PC or tablet of a construction general partnership (Snc), used by one of the partners).
• assets made available to directors (understood to be without any specification, so that in any case the shareholder/director would be exempt, regardless of whether or not he or she pays for such use);
• assets made available to a shareholder who is an employee or self-employed worker, where such assets constitute fringe benefits subject to the rules laid down in arts. 51 and 54 of the aforementioned Consolidated Income Tax Act (TUIR) (in other words, if the benefit has been correctly handled for the employee-shareholder or professional-shareholder, no report is due);
• assets made available to the sole proprietor (so a sole proprietor need not report anything if he or she uses for private purposes assets registered under his or her own VAT number);
• assets of companies and private associative entities carrying on commercial activity, resident or non-resident, made available to non-commercial entities that are shareholders and use the same assets exclusively for institutional purposes;
• housing of undivided-property residential building cooperatives granted to their members;
• assets for public use for which the related costs are fully deductible notwithstanding the private use recognised by law (for example taxis).

Reporting of loans

In addition to, and independently of, the report on assets provided free of charge to shareholders, any loans and/or capital contributions made by the same persons (or their family members) in favour of the company or business must also be reported.

The report concerns only loans made during the tax period under observation (2014); any loans made previously (even if still outstanding) are irrelevant.

Regardless of any other consideration, it should be stressed that the purpose of this report is to highlight any inconsistent positions of the lender for the purposes of the redditometro (income assessment tool).

Consider the following example:

• Mr Rossi made a loan of 50,000 euro to the company in which he holds an interest;
• the income declared by Mr Rossi is 20,000 euro;
• the Agenzia delle Entrate (Italian Revenue Agency) could ask the taxpayer where he found the funds needed to make the loan to the company and, in the absence of justification, could carry out an assessment under the redditometro.There is no reporting obligation where the value of loans and capital contributions, considered individually, does not exceed 3,600 euro.
• In this regard, consider that:
• The report must be made only by the company and, unlike the rules on the free grant of assets, it cannot be sent by the individual shareholder.
• loans means sums lent to the company on any basis, whether interest-bearing or interest-free.
• capital contributions or contributions means sums paid to the company not as a loan but as a strengthening of its equity, as in the case of subscription and capital increases, payments to cover losses, on account of capital increase, on account of future capital increase, waivers of repayment of loans previously granted, etc.).Of particular importance is verifying the threshold for the reporting obligation: this threshold refers to the individual shareholder and not to the company. To verify whether it has been exceeded, loans must be considered gross of any repayments made in the same tax period to the shareholder or to the entrepreneur’s family member.
• Where a person made a loan in years prior to 2014 and, during that year, waived repayment, it is considered that no report is required, even though in the accounts the company is capitalised. This is because there was no financial outlay by that person.

· 26 January: loan 8,000 euro;

· 22 May: loan 9,000 euro;

· 8 September: repayment 15,000 euro.

The balance of the loans at 31 December 2014 is 2,000 euro, but the report must nevertheless be made for the amount of 17,000 euro, stating the date of 22 May 2014 (the date of the last disbursement to the company).

The report must be made both by businesses keeping ordinary accounts and by those keeping simplified accounts; however, the obligation applies to businesses keeping simplified accounts that have a current account dedicated to the business (no monitoring is provided for accounts used for both business and personal or family needs).

Finally, it should be noted that data relating to any contribution of which the tax authorities are already in possession are excluded from the reporting obligation (for example, a loan made by public deed or authenticated private agreement).

The firm remains at your disposal for any further clarification.

Kind regards

Signature

Studio Rimoldi