Italy: Introduction of a Financial Transaction Tax (FTT)
Within the framework of discussions to approve the Stability Law 2013-2015, some amendments were presented last week with regard to a Financial Transaction Tax (FTT) in Italy in order to modify the methods of its application, the relevant rates and the date of its implementation.
The main proposals by the Italian Government at present under discussion can be summarised as follows:
- Postponement of the application date of the FTT to 1 March 2013 for transactions on shares and other participation in financial instruments issued by companies resident in Italy and to 1 July 2013 for transactions on derivatives based on stocks.
- Application of a 0.2% FTT on each transaction connected with the transfer of ownership of stocks, other participation in financial instruments issued by companies resident in Italy as well as securities representing the same, regardless of where they are issued, the transactions on Regulated Markets and on a Multilateral Trading Facility to be subject to a 0.1% rate.
- Increase in the FTT rate to 0.12% and 0.22% respectively for the period from 1 March to 31 December 2013.
- Application of the FTT regardless of where the transactions are executed and irrespective of the country of residence of the counterparties.
- Application of the FTT on the positive net balance as of end of day for each stock.
- Derivative contracts: application of the FTT as a fixed amount based on the contract notional amount, with a maximum of EUR 200 for each transaction with a notional amount higher than EUR 1 mn; application of the FTT either on the derivative contract or on the possible relevant transfer of resulting stocks.
- Application of 0.02% FTT on the “High Frequency Negotiations” (quick trading on electronic platforms), taking into consideration amended or cancelled orders on the involved securities for a number not lower than 60% of the total of transmitted orders.
- Exemption from FTT for listed companies that have an average capitalisation of less than EUR 500 mn in the month of November of the previous year of the tax application, the list of such issuing companies to be published by the Ministry of Economy and Finance (MEF).
- Exemption from FTT for the market making activity and intra-group transactions, as well as for pension saving schemes.
- Identification of the intermediary that has executed the transaction as responsible for the application of the FTT (“liable party”); in cases of more than one intermediary, the FTT will be applied by the intermediary closest to the investor.
- Appointment of a fiscal representative in Italy to be mandatory for non-resident investors, in order to comply with the FTT payments duties.
- Interim period of three calendar months after the entry into force of the law: the FTT will be paid in bulk on the 16th day of the 6th month following the entry info force of the Decree. When fully operational, the FTT will be paid monthly, by the 16th day of the month following the month in which the relevant transactions are settled.
The above information is still the subject of ongoing discussion and changes could occur at any time before final approval. For the time being, no additional information is available.
We are monitoring the progress of the proposal and will provide further information as it becomes available.
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