partnerships, professional associations and similar entities - Use of tax withheld to offset their debts 1 INTRODUCTION With the circ. 12/23/2009 No 56, the Inland Revenue has provided some clarity to the treatment of withholding taxes from companies and associations in art. 5 of the Income Tax Code.
In particular, it was the possibility to use the deductions remaining after the deduction IRPEF payable by members or associates to offset the debts of their company or association.
Here we analyze the questions at issue.
2 tax liability of partnerships and professional associations
2.1 TAXES ON INCOME Article
. 5 of the Income Tax Code governing income from: •
unincorporated associations formed between individuals for the exercise in association of arts and professions (so-called group practices);
• partnerships (partnerships, general partnership, limited partnership); •
company treated (company rigging and de facto corporation);
• family businesses.
The income from these subjects (eg self-employment od'impresa) are allocated to each member, associate or participant, regardless of the actual perception, in proportion to its share in the profits (so-called principle of transparency).
Therefore, for the purposes of income tax of companies and associations in question is not accorded a full and separate from the subjectivity of the member, Associate or participant, despite: •
burden on them accurate accounting and declarative; •
suffer withholding taxes, for example on the compensation received for the self-employed professional and certain business income (eg, commissions, benefits in respect of buildings).
2.2 OTHER TAX
This situation is not reflected in other areas of taxation, in which the parties concerned have fully recognized for tax purposes.
In particular, companies or associations referred to in art. 5 of the Income Tax Code: •
for VAT purposes, and they satisfy the criterion of subjective subjectivity distinct from that of members or associated (Article 4 co. 2 No 1 and art. 5 co. 1 of Presidential Decree 633/72);
• IRAP in scope, are among the persons liable (art. 3 co. 1 letter. b) and c) of LD. 446/97);
• assume the status of collection of tax (Article 23 co. 1 of Presidential Decree 600/73). 3
chance to use the withholdings TO OFFSET THEIR DEBTS of partnerships and professional associations
Article. 22 co. 1 of the Income Tax Code, "the withheld income tax for companies, associations and companies referred to in Article 5 shall be deducted in the proportion established there, the taxes payable by individual shareholders, members or participants."
The wording of the provision would thus appear to allow the deduction of tax withheld only by the shareholders, members or participants, with the result, usually, to: •
determine their credit position for personal income tax, because, for example, the withholding of 20% of gross professional fees is higher IRPEF corresponding to net income;
• having to request such a refund claim if he can not be offset with other pay ¬ ments owed by the individual.
To avoid these consequences, according to the Internal Revenue Service estimates that the Income Tax Code should be read in key developmental and systematic in the light of the possibility of compensation intro ¬ duced art. 17 of LD. 241/97.
Therefore, the Inland Revenue has clarified that the deductions that remain, once operated the deduction from income tax debt of the partners or associates, can be "transferred back" and used by companies or associations referred to in art. 5 of the Income Tax Code, so that the claim related to those inevitably acquired by the company or association, the absence of tax debt, can be used by them in compensation with payments of taxes and other contributions (eg VAT, IRAP contributions INPS and considered employees), through the F24
To this end, it established a specific tax code.
3.1 AMOUNT OF CREDIT FROM "repatriated"
In this regard, it must be clarified if the member or associate: •
received from using deductions to offset other tax liabilities in addition to IRPEF (Eg the additional regional and municipal); •
can freely decide the amount of credit remaining on the "hand back" to the company or association or whether it is bound by the findings of the declaration.
3.2 REQUIREMENTS FOR COMPENSATION
According to the Inland Revenue, the possibility, by the company or association, to offset the remaining credit on the deemed incurred by it is subject to the following requirements: •
consent of members or associated ;
• indication in your tax return.
3.2.1 Consent of members or associated
The use by the company or association the residue of a withholding tax credit requires the prior consent of the partners or associates, to manifest, either: •
in a special act having certain date (eg, private deed or recorded, e-mail certificate ¬ ed, letter without an envelope with postmark affixed directly on the sheet);
• in the constituent.
In this regard, the Internal Revenue Service does not clarify whether it requires the consent of all members or affiliates, or if each of them may decide, on this point are therefore required further explanation, although it is preferable and more responsive to the purposes of new procedure believe that every member or associate is free to exercise the faculty concerned.
Consent may be reported to credit resulting from: •
from withholding tax in each period, in this circumstance, the consent must be renewed annually;
• or, from all withholding taxes, without limit of time, expressed until revoked. 3.2.2
indication in the statement of income of the company or association
that the compensation can operate, it is also necessary that the condition laid down by art. 17 of LD. 241/97, namely that the claim is clear from the statement of income of the company or association (SP ONLY).
3.3 PROHIBITION A further retransferred member or associate
Once deductions have been attributed to the collective entity and its credit was used by him in setting off their tax debts and charges, any residual amounts of the claim can not be transferred back to members or associates, but must be used exclusively by the company or association in subsequent compensation.
3.4 WITHDRAWAL of assent
In any case, the Revenue Agency has provided for the faculty, by the shareholders or members, to revoke the agreement to "transfer" to the company or association of credit remaining to be affirmed with a act with a certain date or by amending the articles of association. Effectiveness
withdrawing
Withdrawal of consent takes effect with respect to claims arising from withholding tax during the period in which the withdrawal is made.
3.5 DISTRIBUTION OF PROFIT
Upon distribution of the residual attributed held by the shareholder to the company or association or partnership will result in a greater supply of money (equivalent to the saving made as a result of the institution attended compensation received by withholding payments due from it), without setting relevant transaction from a tax.
3.6 EFFECTIVE DATE
Revenue Agency does not specify the effect of the new procedure.
In this respect the new rules could therefore be regarded as already covered by reference to the year 2009, but the point is needed to confirm the Inland Revenue, in consideration of what is expected in models SOLE 2010 pending.
