Campione d’Italia

Campione d’Italia is the only exclave of Italian territory, located on the shores of Lake Lugano. Since the enactment of the TUIR in 1986, there has been special tax legislation for residents of Campione, given that the currency in that municipality is the Swiss Franc and its territory is completely surrounded by the Swiss Confederation. Until 31.12.2019 Campione d’Italia was an EU non-customs territory, assimilated in all respects to Switzerland. As of 1 January 2020, the municipality of Campione d’Italia and the Italian waters of Lake Lugano are included in the customs territory of the EU and in the territorial scope of application of the general excise regulations. On the other hand, these territories still remain excluded from the territorial scope of application of VAT . The novelties are the result of the amendments made by EU Regulation No. 474 of 19 March 2019, and by Directive 2019/475/EU, motivated by the fact that the historical reasons that justified the exclusion of Campione di Italia from the customs territory due to its territorial isolation and the consequent economic disadvantages can no longer be considered current. In order to ensure the application of these changes, the 2020 Budget Law introduced new tax measures for the Municipality of Campione d’Italia as of 1 January 2020, with reference to both indirect and direct taxes. The conversion law of the D.L. Rilancio modifies and extends some of the benefits introduced by the 2020 Budget Law with reference to direct taxes and IRAP . In particular, Article 129- bis: extends from 5 to 10 tax periods the 50% reduction of income tax and IRAP for individuals and companies that reside or are registered with the Chamber of Commerce of Campione d’Italia, while raising the maximum amount of these facilities; modifies the measure of the tax credit for investments made in Campione d’Italia, modulating it according to the size of the company also in the maximum amount that can be granted it entrusts to a provision of the Agenzia delle Entrate (Revenue Agency) the percentage of the flat-rate reduction of business income produced in Campione d’Italia; it subjects to excise duty, at a preferential rate, heating oil and electricity respectively consumed and used in Campione d’Italia.

A 50% reduction of IRPEF, IRES and IRAP, pursuant to Art. 188-bis of the TUIR, due on income of natural persons who do not carry out business activities, registered in the registers of the Municipality of Campione d’Italia even after 20 October 2019; self-employment income related to activities carried out in offices located in the Municipality of Campione d’Italia even after 20 October 2019 business income earned by sole proprietorships, partnerships and resident and non-resident IRES entities, registered with the Chamber of Commerce, Industry, Handicraft and Agriculture of Como and having their operational headquarters, or a local unit, in the municipality of Campione d’Italia, also after 20 October 2019. These facilities shall apply as from the 2020 calendar year and, by way of derogation from the de minimis aid rules set forth in EU Regulation No. 1407/2013, shall operate within the limit of EUR 800,000 for each enterprise, raised to EUR 120,000 for fishing and aquaculture enterprises and EUR 100,000 for enterprises engaged in the primary production of agricultural products.

The income of individuals and business income produced in Campione d’Italia, under specific legal conditions, may be computed in euro even if produced in francs, on the basis of the current exchange rate, reduced by a flat rate of 30%. This percentage (increased or reduced by an amount equal to the average annual percentage deviation recorded between the two currencies, is established by order of the Director of the Revenue Agency, to be issued by 15 February of each year) may not, however, be less than 30% . Article 129-bis paragraph 2 of the conversion law of the Relaunch Decree also entrusts to this provision of the Revenue Agency the determination of the percentage of the flat-rate reduction of business income produced in Campione d’Italia, the measure of which cannot, however, be less than 30%.

It is provided that: – diesel fuel used as heating fuel in the territory of the municipality of Campione d’Italia is subject to excise duty at a reduced rate of EUR 201.50 per thousand litres (instead of the current rate of EUR 403.2 per thousand litres). For such consumption, the reductions in the cost of diesel fuel provided for by law in territories falling within mountainous areas do not apply; electricity consumed in the Municipality of Campione d’Italia is subject to excise duty at the following reduced rates:

• euro 0.001 per kWh of energy used for any application in households;
• EUR 0.0005 per kWh of energy used in premises other than dwellings. The excise measures apply from the date of authorisation and remain in force for 6 years.

Entrepreneurs and freelancers resident or based in the Municipality of Campione d’Italia are NOT required to have a VAT number. In fact, nothing has changed for VAT purposes with the Municipality’s entry into the EU customs territory on 1 January 2020. This is essential to ensure a level playing field between economic operators established in Switzerland and in the Italian Municipality of Campione d’Italia through the application of a local indirect taxation regime in line with Swiss value added tax. For VAT purposes, therefore, the territoriality rules do not change.

The Budget Law 2020 established a local indirect taxation regime in line with the Swiss value added tax.
The new Campione d’Italia consumption tax (ILCCI), is intended to apply to supplies of goods and services as well as imports made in the territory of that municipality for final consumption, including the introduction of goods from the territory of the EU. Article 1 co. 559-572 of Law No. 160 of 27.12.2019 (Budget Law 2020) regulates the new Campione d’Italia Consumption Tax (ILCCI), which is intended to apply to supplies of goods, services as well as imports made in the territory of that Municipality for final consumption, including the introduction of goods from the territory of the EU. It is considered as final consumption:

• who makes purchases of goods and services for purposes other than the exercise of an undertaking, trade or profession;
• who carries out transactions excluded from the application of value added tax in accordance with Swiss federal law.

The proceeds of the ILCCI are attributed to the Municipality of Campione d’Italia.
Supplies of goods are deemed to be made in Campione d’Italia if the goods at the time of delivery or provision are located in the territory of the municipality.
Supplies of services are territorially relevant:

• if they are rendered in the exercise of an enterprise, trade or profession by persons having their place of business in the territory of the municipality.
• according to territoriality criteria similar to those laid down in the Swiss Federal Value Added Tax Act, if they are rendered in the exercise of an enterprise, trade or profession by persons not established in the territory of the municipality. The tax rates apply at the same rate as the Swiss Federal VAT Act.

In Switzerland they are currently planned:

• a standard rate of 7.7%;
• a special rate of 3.7% for overnight stays in hotels (including breakfast);
• a reduced rate of 2.5% for certain everyday goods (e.g. foodstuffs).

In Switzerland they are currently planned:

The ILCCI declaration is submitted by taxpayers to the municipality, also in non-telematic form, by 30 June of the year following the year in which the transactions are carried out, using the model that will be approved by decree of the Ministry of Economy and Finance.

The firm is available for further clarifications and insights.