Italy: IFTT : Amendments to the Implementing Decree

23.09.2013

On 16 September 2013, the Italian Ministry of Economy and Finance (MEF) issued a Decree (the “Amending Decree”, available in Italian only) to complete and amend the Implementing Decree of the Italian Financial Transaction Tax (IFTT)1.

The Amending Decree is available on the website of the MEF (in Italian only) and will be soon published in the Official Gazette.

Note: Art. 2 of the Amending Decree provides that the modifications affecting bonds and debt securities will come into force on 1 January 2014 and the remaining part of the Amending Decree will come into force upon publication in the Official Gazette.

The main amendments introduced by the Amending Decree to some articles of the Implementing Decree are as follows:

  • Art. 2, par. 1-bis

    The IFTT is applied also if the transfer concerns the bare (naked) ownership of the shares, of the security-related financial instruments, of the representative securities or of other securities.
  • Art. 4, c. 2 and art. 7, c. 2

    The following rules have been simplified:

    • Rules for the calculation of the tax base amount in case of settlement by delivery of shares for the derivative financial instruments;
    • Rules for the calculation of the prevalence of Italian shares within baskets or indexes underlying the derivative financial instruments.

  • Art. 7, c. 3

    The IFTT is not applied if the derivative financial instruments and the securities have dividends on shares as their underlying or reference value. The IFTT is applied to the option rights referred to in art. 2441 of the Italian Civil Code, as well as to the bonds and debt securities, not explicitly excluded from IFTT, which are considered securities as those indicated in art. 7, par. 1 lett. b) of the Implementing Decree.
  • Art. 8, c. 1

    The variations of the underlying or reference value are included among the cases of amendment to the derivatives contract. In particular, when variations are not due to a decision taken by the parties, the IFTT is due only if it has not already been paid following a previously verified prevalence.
  • Art. 15, c. 1

    The following cases are not in the scope of the IFTT:

    • The attributions of shares and security-related financial instruments and representative securities due to distribution of income, reserves and capital redemption, regardless of whether the shares are newly issued or already circulating or resulting from third parties or from the distributing company itself;
    • The bonds and debt securities, only when they include the unconditional obligation to pay upon maturity a sum not smaller than the one quoted on the same;
    • The transactions in bonds and debt securities compliant with requirements as in art. 2, par. 22 of the Law Decree 138/2011, not only when acquiring newly issued shares upon bond conversions (as already provided for by the Implementing Decree), but also when the ownership is acquired following the exchange or the redemption of the bonds.

  • Art. 16, c. 3

    Some operational aspects have been better defined in connection with the exemption from IFTT for subjects dealing with market making or liquidity provision activity within currently allowed market practices.

------------------------------------------
1. Ministerial Decree, dated 21 February 2013, implementing Law no. 228 of 24 December 2012.

This Taxflash is intended to provide customers with general information gathered from different sources that are generally believed to be reliable. Clearstream Banking S.A. does not guarantee the accuracy or completeness of the information and does not undertake to keep it up to date. Use of the information made available in this Taxflash is at the customer’s own risk and Clearstream Banking S.A., its subsidiaries and affiliates expressly disclaim any liability for any errors or omissions reflected herein. The information in this Taxflash does not constitute legal or tax advice.