Investment in Italy

Investment in Italy(EDP) system located abroad, connected to the Italian subsidiary via telephone/satellite.The subsequent printing of the accounting books has to take place on the subsidiary’spremises in Italy, where the data, books and supporting documentation must also be kept.It must also be possible to print the accounting data already registered at any moment andin real time at the Italian company’s premises.Therefore, in a tax inspection the books, registers and accounting documents have to bemade available to the tax authorities immediately upon request. If the accounting booksare not shown to the tax authorities upon request, the financial data may be consideredunreliable and the authorities have the right to assess income taxes and VAT on the basis ofassumptions, without considering the company’s actual results.The Italian tax authorities have also clarified (in Circular no. 45 of 19 October 2005) thatinvoices may be stored abroad in a digital system only on the following conditions:• there must be a reciprocity agreement between the two states with regard to indirect taxation• the Italian company must ensure automatic access to the archive at any moment fromits registered office.4.6The financial statementsThe directors must draw up the financial statements after the end of the year. The statementscomprise a balance sheet, profit and loss account and explanatory notes.The financial statements must be drawn up clearly and present a true and fair view of theassets, liabilities, financial position, and profit or losses of the company. If the informationrequired by law is insufficient to present a true and fair view, additional information mustbe given.If, in exceptional cases, the application of a rule is incompatible with a true and fair view, therule must not be applied. The notes to the financial statements must explain the departurefrom the rule and the impact this has on the representation of the assets, liabilities, financialposition, and profit or loss.Special rules on the format of financial statements are provided for companies operating inspecific sectors.4.7International accounting standards (IAS/IFRS)Full IFRSsListed companies: With Italy being a member of the European Union, Italian listedcompanies have been required to prepare their consolidated financial statements inaccordance with IFRSs since 2005. Italian companies preparing their financial statementsin accordance with IFRSs are required to use IFRSs “as adopted by the EU”. The EUendorsement mechanism means that there is a time lag between when an IFRS is issuedby the IASB and its availability for use by Italian companies. Listed companies have beenrequired to use IFRSs in their individual/separate financial statements since 2006.© 2012 KPMG S.p.A., KPMG Advisory S.p.A., KPMG Fides Servizi di Amministrazione S.p.A., KPMG Audit S.p.A., Italian limited liability share capital companies, and Studio Associato Consulenza legale e tributaria, anItalian professional partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.33