Capital Gains Taxation - Italy


Capital gains from shares, equity convertible bonds or equity rights that do not constitute qualified participations1 and from debt securities, are subject to 26% substitute tax. A reduced 12.50% rate applies to capital gains derived from bonds issued by:

i.The Italian government and its public entities and administrations (e.g. Postal Certificates, Credit certificates issued by the Cassa Depositi e Prestiti, bonds issued by Regions, Provinces, Municipalities) as well as other similar bonds issued abroad by multinational organisation (for example BEI, BIRS, etc.) constituted under an international agreement made enforceable in Italy.

ii.Central governments and their Local Administration of foreign countries included in the “White-List” (see Ministerial Decree 4 September 1996).

Under Italian tax law, the taxation of capital gains from financial investments may take place under one of three alternative regimes set forth by Legislative Decree No. 461/1997:

  • The tax return regime (also “TRR”) or “regime della dichiarazione” or “regime ordinario”;
  •  the non-discretionary mandate regime (also “NDMR”) or “regime del risparmio amministrato”;
  • the discretionary mandate or portfolio management regime (also “PMR”) or “regime del risparmio gestito”.

Pursuant to Article 5 of Legislative Decree No. 461/1997, the TRR represents the default regime for Italian resident individual investors. Alternatively, each Italian investor may elect for the application of two optional regimes, (i) NDMR regime and (ii) PMR regime. Under TRR each capital gain must be reported and taxed by the investor, whereas under the alternative two regimes the relevant Italian financial intermediary acts as a withholding agent for capital gain tax purposes, which eliminates residual reporting and tax obligations for the investors.

Italian resident Customer must be aware that Clearstream Banking does not apply the alternative regimes (i.e. NDMR and PMR regimes) for securities deposited in its accounts.

Italian resident Customer must be aware that all taxable capital gain must be reported and taxed by the relevant beneficial owners under the TRR. In particular, with reference to:

  • Individuals and persons with equivalent tax treatment (e.g. non-commercial entities), the substitute tax is applied according rules set forth by Article 67 and 68 Italian Income Tax Code (also “IITC”).
  • Other entities, not mentioned above, the substitute tax is not applied. In fact, gains and losses realised from disposal or redemption of financial assets are included, for corporate income tax purposes, in the annual taxable base of mentioned entities.

Under Article 6 of Legislative Decree No. 461/1997, the NDMR represents the default regime for non-Italian resident investors. Nevertheless, each investor holding a direct deposit with a relevant intermediary can opt for the application of TRR by waiving the default NDMR regime. A waiver may also be exercised by an intermediary holding third party assets under an omnibus account with an Italian relevant intermediary. Such waiver automatically implies that each beneficial owner is subject to TRR.

Italian securities held in Clearstream Banking are all subject to TRR. Therefore, beneficial owners must comply with taxation requirements under TRR and file an annual tax return to Italian Tax Authorities. Clearstream Banking does not apply any substitute tax on capital gains.

Non-Italian resident Customers must be aware that all taxable capital gains (that is, gains that are not out of scope of Italian income taxation, exempt under domestic law or exempt under any applicable treaty law) must be reported and taxed by the relevant beneficial owners under the TRR. Under Article 23, para 1(f), of the IITC the following gains are in principle in scope of Italian taxation even if realised by non-Italian resident beneficial owners, save for the application of any available exemption or treaty law protection:

  • Gains and losses realised from the disposal of Italian issuer shares representing a qualifying shareholding or from other instruments embedding the right to obtain or trade a qualifying interest (e.g. fixed income securities convertible in a qualifying equity participation).
  • Gains and losses realised from disposal of Italian shares not representing a qualified shareholding, if the shares are not listed in a recognised regulated market.
  • Gains and losses from the disposal or redemption of non-participating securities (e.g. bonds, deposit certificates and similar securities with the exception of those representing goods) if the securities from which the income stems are not traded in a regulated market. The gains and losses are in scope of Italian taxation even if realised from bonds issued by non-Italian entities, if the bonds are deposited with an Italian intermediary.
  • Gains from derivative contracts, if the contracts are not executed in a recognised regulated market

Specific domestic exemptions are available for non-Italian resident Customers and beneficial owners which are resident of a White-List country and which individually comply with the relevant documentation requirements in a timely manner. Double tax treaty protection may also be available to treaty qualifying Customers and beneficial owners who individually comply with the applicable documentation requirements in a timely manner.

Customers must be aware that they are responsible for:

  • informing the beneficial owners underlying of the assets held in omnibus account with Clearstream Banking about their tax responsibility; and,
  • keeping adequate documentation available for eventual inquiry by the Italian Tax Authorities.

Both Italian resident and non-Italian resident beneficial owners and Customers must also be aware that they have the responsibility to comply with the following obligations in case taxable income is attributable to the same under Italian tax law and no exemption is available:

  • File an annual tax return to the Italian Tax Authorities, taking into account the then applicable legal and regulatory framework under Italian law,
  • Pay any tax due to the Italian Tax Authorities, taking into account the then applicable legal and regulatory framework under Italian law, and
  • Comply with the reporting and tax requirements of the respective country of residence, if non-Italian resident beneficial owners.

Clearstream Banking recommends its Customers and any respective omnibus account beneficial owner to seek advice from their tax advisor.


1 Article 67 of the IITC defines “qualifying shareholdings” as the holding of shares in a listed company that grants voting rights in the ordinary shareholders meeting in excess of 2% or a participation to the capital in excess of 5%. In case of unlisted shares, the qualifying holding thresholds are, respectively, 20% of voting rights and a 25% participation to the capital. The two criteria – i.e. the voting rights and capital ownership - are alternative.

In order to apply the above thresholds disposals must be monitored dynamically and a qualifying disposal is triggered when shares of an amount in excess of the thresholds are disposed of within a 12 month time frame. Monitoring starts when an investor reports the ownership of no less than a qualifying amount for at least one day. In other words, buy and sell transactions causing the disposal of an amount of shares in excess of the qualifying amount are not relevant if at any point in time during buy sell the investor does not own on one day a qualifying stake.

The qualifying shareholding thresholds must be determined by taking into account: (i) shares (excluding “savings shares” issued under Article 145 of Legislative Decree No. 58 of 24 February 1998); (ii) convertible bonds, warrants, forwards, options and any other right that may entitle the owner to obtain Italian shares, including by means of a subscription of new issues shares; (iii) derivatives, if they entitle the owner to the purchase or subscription of the underlying shares (futures are excluded unless delivery of the underlying is possible).