Possible extension to the IRPEF subjects of the rules of the amount carried over of the losses for IRES subjects

The Draft Budget Law for 2019, under discussion by the Parliament, could change the discipline concerning the use of the enterprise’s losses for natural persons.
Currently, article 8 of the TUIR (Italian Law for national income tax), which rules upon the application of the income tax on natural persons, provides that:

  • tax losses generated by enterprises in simplified accounting regime or from a share in a simple company in simplified accounting, as well as those generated by self-employed entrepreneurs, can be compensated against taxable incomes of any nature in the same fiscal year in which they are generated, without the possibility of carryforwards of the unused surplus;
  • tax losses generated by enterprises in ordinary accounting regime or from shares in a simple company in ordinary accounting regime can be offset against incomes generated in the same fiscal year, and the exceeding amount, if any, in the following fiscal years, but no more than five.

The implementation under discussion, firstly provides the elimination of the possibility, for subjects under ordinary accounting regime, to offset losses generated through enterprise activity against other income of different nature. Article 7 of the Draft Budget Law will allow for such taxpayers only to compensate such losses against taxable incomes generated by their enterprise activity. This would eliminate any difference between subjects under ordinary and simplified accounting regime.
The second aspects under discussion is the removal of the time-limit for exceeding losses brought forward. Natural persons will be able to carry forward fiscal losses without any time-limit and will be able to use them in order to offset an amount up to 80% of their taxable incomes. This will equalize the treatment of fiscal losses between natural persons and corporations (that are subjected to the same time-limits).
The Draft Budget Law also should extend the application of the provision of article 84, par. 3, of the TUIR to natural persons, allowing the possibility to use losses generated in the first three years of activity after the incorporation of a new business, without any time or quantitative limit.
The article 7, par. 2 of the Draft Budget Law provides that the new dispositions will be applicable starting from January 1st 2018.

Our Professionals are available to provide further clarifications on the topic.