Meet the Co-chairs - TAGLAW
Williams Mullen (VA)
Meet the Co-chairs - TIAG
Mercer & Hole
Cohen & Company (Ohio)
Fineman West & Co. LLP
The Italian legislator, with Budget Law for fiscal year 2017, introduced a special tax regime tailored for individuals who transfer their tax residence to Italy. Such a regime - entered into force on the 1st of January 2017 - is indeed very attractive for high net worth individuals, irrespective of their working status.
The substitutive flat tax and its requirements
The special regime provides for an optional flat taxation on foreign-source incomes and gains, instead of the ordinary progressive tax rates, under the terms as set forth by the law.
The option for a substitute tax on foreign-source income and gains is available to individuals, both Italian or foreign nationals, who obtain the Italian tax residence, provided that:
Online companies incorporated abroad (with no presence in Uruguay) are required to pay taxes in Uruguay whenever their clients are located within Uruguayan territory.
Online services providers (such as Netflix and Spotify) are subject to VAT at the rate of 22%, plus Non-Residents Income Tax (so-called IRNR) at the rate of 12%, both assessed over the sales price. Online services intermediaries (such as Uber and Airbnb) are subject to the same taxes, except that IRNR is assessed only over 50% of their sales where one of the parties of the ultimate transaction is based abroad.
On June 21, 2018, the U.S. Supreme Court released its much-anticipated opinion in South Dakota v. Wayfair, Inc., in which it held that physical presence within a State is no longer a prerequisite to the imposition of liability on out-of-state sellers to collect and remit sales taxes. In doing so, the Court overruled two of its own earlier cases—National Bellas Hess, Inc. v. Department of Revenue of Illinois and Quill Corp. v. North Dakota.
In Wayfair, the Court upheld a 2016 South Dakota sales tax law that required out-of-state sellers with no physical presence in the State to collect and remit sales tax if they annually delivered more than $100,000 of goods or services into the State or engaged in 200 or more separate transactions for delivery of goods or services into the State. The law was not retroactive and had provisions for expeditious judicial review. South Dakota’s courts had stricken the law as being contrary to the U.S. Supreme Court’s previous holdings in Bellas Hess and Quill.
On June 19, 2018, the U.S. Supreme Court held, in a 5-4 decision written by Justice Kennedy, that states may require an out-of-state retailer to collect and remit sales tax on purchases by residents within that state. [South Dakota v. Wayfair]. Until now, the states could not compel any retailer to collect the tax unless it had a physical presence in the state.
Wayfair is a historic ruling that will change the landscape for state sales tax collection. Many states have already enacted legislation in anticipation of a favorable ruling in Wayfair, and it is anticipated that the states that have not done so will move quickly to enact such legislation to increase their revenues.
The Supreme Court announced its ruling today in the biggest sales tax case in 26 years. The ruling affects remote and online shopping by removing a limitation on a state’s ability to enforce its collection and remittance statutes against retailers who do not have a physical presence in the state.
Every state with a sales tax requires retailers to collect sales tax from customers and to pay that tax to the state’s department of revenue. A retailer with a brick-and-mortar store in a state has little choice but to comply since the law may be more easily enforced against it. However, retailers who sell by catalog or internet only, and have no presence in the state, have always argued that this requirement is unduly burdensome. The states, in turn, have had great difficulty in enforcing this law against these “remote retailers.”