December 13, 2023

Legal interest at 2.5 percent

Effective January 1, 2024, the rate of legal interest is reduced to 2.5 percent per year. This was stipulated by the November 29, 2023 Ministerial Decree of the Ministry of Economy and Finance, published in Official Gazette No. 288 of December 11, 2023.

These are the main consequences of the interest rate increase:

Aggravated repayment

The increase in the legal interest rate results in an increase in the amounts due in the case of a voluntary reprimand under Art. 13 of Legislative Decree. 18/12/97 n. 472.

In fact, in order to regularize omitted, insufficient or late payments of taxes by means of the voluntary repentance, it is necessary to pay, in addition to the prescribed reduced penalty, also the interest on arrears calculated at the legal rate, with accrual day by day, starting from the day following the day by which the obligation had to be fulfilled and up to the day on which the payment is made.

The legal rate to be applied is the one in force during individual periods, according to a pro rata temporis criterion, and is therefore equal:

  • At 0.1% from 1/1/2017 to 12/31/2017;
  • At 0.3% from 1/1/2018 to 12/31/2018;
  • At 0.8% from 1/1/2019 to 12/31/2019;
  • At 0.05% from 1/1/2020 to 12/31/2020;
  • At 0.01% from 1/1/2021 to 12/31/2021;
  • At 1.25% from 1/1/2022 to 12/31/2022;
  • at 5% from 1/1/2023 to 12/31/2023;
  • At 2.5% from 1/1/2024.

Accrual of amounts due as a result of adherence to litigation-defining institutions

The increase in the legal interest rate is also relevant in the case of an option to pay amounts due in installments as a result of the following litigation-defining institutions:

  • adherence to invitations to cross-examination, pursuant to Art. 5 of Legislative Decree. 19/6/97 n. 218; on installments following the first, legal interest is calculated from the day after the first installment is paid;
  • adherence to audit reports, pursuant to Art. 5- bis of Legislative Decree. 19/6/97 n. 218; on installments following the first, legal interest shall be calculated from the day following the date of notification of the notice of settlement of the partial assessment;
  • Accession assessment, pursuant to Art. 8 of Legislative Decree. 19/6/97 n. 218; on the installments after the first, legal interest is calculated from the date of completion of the deed of accession;
  • acquiescence to the assessment, pursuant to Art. 15 of Legislative Decree. 19/6/97 n. 218; on the installments following the first, legal interest is calculated from the day following the payment of the first installment;
  • Judicial conciliation, pursuant to Art. 48 of Legislative Decree. 31/12/92 n. 546; on the installments following the first, legal interest shall be calculated from the day following the day of the conciliation report or the day of communication of the decree of termination of the judgment.

“Crystallization” of the legal interest rate

In relation to adhesion assessment, the Circ. Internal Revenue Service 21/6/2011 no. 28 (§ 2.16) clarified that the measure of the legal rate should be determined with reference to the year in which the act of adhesion is finalized, remaining constant even if the payment of installments continues in subsequent years.

This principle should also be considered applicable in relation to the other litigation-defining institutions mentioned above.

Measure of interest not computed in writing

The new measure of the legal rate is also relevant to the calculation of interest, not determined in writing, in relation:

  • To capital given on loan (art. 45 co. 2 of TUIR);
  • to interest that contributes to the formation of business income (Art. 89 co. 5 of the TUIR).

Adjustment of usufruct and annuity coefficients for indirect tax purposes

A subsequent DM will adjust the coefficients for determining value, for the purposes of registration, mortgage, cadastral, inheritance and gift taxes, to the new legal interest rate:

  • Of perpetual or indefinite annuities;
  • Of fixed-term annuities or pensions;
  • Of annuities and life pensions;
  • Of usufruct rights for life.

Effective date

The new coefficients will apply to public deeds formed, court documents published or issued, notarized private deeds and unauthenticated private deeds submitted for registration, successions opened and gifts made, effective Jan. 1, 2024.

Effects for contribution purposes

The change in the legal rate also takes effect in relation to civil penalties provided for the failure or delay in making social security and welfare contributions, pursuant to Art. 116 of L. 12/23/2000 no. 388 (Finance Act 2001).