General information - types of securities, deadlines, other market specifics - Italy
Types of securities
The eligible securities issued in Italy are as follows:
- Government bonds and similar instruments, including:
- Certificati del Tesoro in XEU (CTE) - fixed rate with maturity up to 5 years - converted 1-to-1 into EUR;
- Treasury Bills ("Buoni Ordinari del Tesoro" - BOT);
- Buoni del Tesoro Poliennali (BTP);
- Certificati di Credito del Tesoro (CCT);
- Certificati del Tesoro con Opzione (CTO);
- Certificati del Tesoro Zero-Coupon (CTZ);
- Coupon Stripping (BTP), Principle Stripping (BTP);
- Public debt equivalent (bonds issued by officially recognised organisations (for example, BEI, BIRS etc.));
- Corporate bonds;
- Eurobonds (that is, bonds and similar instruments subject to Legislative Decree 239/1996 or "atypical" instruments subject to Legislative Decree 512/1983 that are issued outside Italy by Italian banks and Italian companies whose shares are listed on an Italian regulated market);
- Foreign bonds:
- Bonds issued by non-Italian corporations or foreign governments of White List countries and deposited with the Italian CSD;
- Bonds issued by the Republic of Italy or other Italian issuer and listed outside Italy are subject to Legislative Decree 505/1999.
Equities (with cash dividend, stock dividend or choice dividend distributions):
- Ordinary shares;
- Preferred shares;
- Shares of co-operative banks;
- Converted shares;
- Savings shares;
- Premium shares.
Types of beneficial owner
The types of eligible beneficial owner recognised for tax purposes in Italy vary according to security type, as follows:
For debt securities:
- Residents of a White List country;
- Central banks and other entities that manage state reserves;
- Supranational organisations recognised as such by Italian law;
- Italian resident corporations.
Types of accounts
Customers holding debt securities on behalf of the above types of beneficial owners may open different types of accounts, and when required provide their tax identification number (TIN):
- Account type “N”: taxable account, TIN is not required
- Account type “S”: Segregated account fully exempted, TIN is not required
Account type “X”: Omnibus account fully exempted, TIN is mandatory at instruction settlement instruction level. If not or incorrectly provided the instruction is rejected. Refer to page Overall process for tax calculation/exemption from withholding tax - Italian debt securities
- Residents of a Double Taxation Treaty (DTT) country;
- EU/EEA corporations;
- EU/EEA pension funds;
- EU/EEA collective investment vehicles (CIV)
- Supranational organisations recognised as such by Italian law.
Statutory deadline for reclaiming withholding tax
The statutory deadline for reclaiming withholding tax using the standard refund procedure is four years following either the interest/dividend payment date or (for bonds) the settlement date of the transaction that was subject to tax.
Clearstream deadline for standard refund applications
The deadline by which Clearstream Banking must receive the documentation for an application is at the latest three months before the statutory deadline. All refund applications received after this deadline will be processed by Clearstream Banking on a "best efforts" basis. However, in such cases, Clearstream Banking accepts no responsibility for forms that have not reached the Italian Tax Authorities by the date considered being the statute of limitations deadline.
Furthermore, Clearstream Banking will apply an extra charge for applications received less than two months before the statutory deadline.
Fees charged for a tax reclaim
In addition to the standard fee charged by Clearstream Banking per reclaim form (as detailed in the Clearstream Banking Fee Schedule), the fees charged by the local custodian for handling tax refund requests for a customer will be passed on by Clearstream Banking to the customer. Currently, a fee of EUR 10 is charged per tax refund file.
Notes on tax reclaims
Customers warrant the completeness and accuracy of the information they supply to Clearstream Banking.
It is the customer's responsibility to determine any entitlement to a refund of tax withheld, to complete the forms required correctly and to calculate the amount due. Clearstream Banking is under no obligation to carry out any investigation in respect of such information.
With respect to tax reclaims in general, customers are reminded that Clearstream Banking cannot accept responsibility for their acceptance or non-acceptance by the Italian Tax Authorities.
Furthermore, customers should be aware that the Italian Tax Authorities' requirements and interpretation of the applicable laws may be subject to changes. In order to safeguard the interests of our customers and to avoid rejections of withholding tax reclaims, customers are strongly recommended to certify their accounts for tax exemption at source or, for dividends, via quick refund and to avoid the standard refund applications.
Note: These notes are provided for general information purposes only. The information contained herein is not intended to provide professional legal advice and should not be relied upon in that regard. Clearstream Banking makes no guarantees, representations or warranties and accepts no responsibility or liability as to the accuracy or completeness of the information. Under no circumstances will Clearstream Banking be liable for any loss or damage caused by reliance on any opinion, advice or statement made in this document, which is subject to change without notice.
Calculation of interest on delayed tax refunds
The method of calculating the interest on refunded withholding tax is rather complex and, as some of the data used in the calculation is not communicated to Clearstream Banking, it is not possible for Clearstream Banking to calculate this interest accurately. Nevertheless, the following explanation of this calculation may be of use in estimating anticipated interest payments or reconciling refunds after they have been received.
Interest on tax withheld that is to be refunded is based on the length of time (the “interest period”) between the date of the coupon payment and the date when the fiscal office instructs the Ministry of Finance to make the payment (the “data ordinata”). The “data ordinata” is not communicated to Clearstream Banking. Consequently, it is not possible for Clearstream Banking to determine how long the interest period is in each case. In addition, there can be a delay between the “data ordinata” and the payment date during which unpaid refunds do not receive interest.
The interest period is divided into semesters (periods of six months). The first semester starts on the day of the dividend payment. However, the interest period excludes both the first semester and the semester in which the “data ordinata” falls.
The rate used for calculating the interest is the sum of the interest rates that are applied to each of the semesters that remain in the interest period. The interest rate for each semester is as published when each semester ends and applies to the whole semester, even if the rate changes during that semester.
The rates of interest paid for each semester in an interest period on refunded tax, starting from 1 January 1988, are indicated in the below table. Important note: Clearstream Banking is not informed on a regular basis of the change of rate and the last rate mentioned in the table may not be the last one applicable.
Example: Calculation of the interest period and the rate of interest to be applied to the full amount to be refunded by the Italian Tax Authorities
Date of coupon/dividend payment:
Start date of the interest period:
01.08.1996: (01.02.1996 + 6 months)
Date of the "data ordinata":
End date of the interest period:
31.07.2000 (the semester that runs from 01.08.2000 to 31.01.2001 is excluded because the date of the "data ordinata" falls within it.)
Number of semesters in the interest period:
8 (from 01.08.1996 to 31.07.2000)
|Individual rates applicable to each of the semesters|
(see above interest rate schedule):
2.5% per semester. (The applicable rate at end of the first semester and all the following semesters.)
The total rate to be applied on the full amount of refunded tax is:
8 x 2.5% = 20%