Italy T2S Monte Titoli – Step 2: Cutoff tax method for debt securities
In Announcement C18012 customers1 were informed about the transfer of T2S-eligible debt securities issued by Monte Titoli to Clearstream Banking AG (CBF)2 on 26 March 2018 including those held in Clearstream Banking S.A. (CBL)3 with exception of securities that are:
- subject to ongoing corporate action events (these securities will be made eligible within 20 T2S business days); or
- asset types not yet supported by the OneClearstream service.
Consequently, the second step of the migration will take place on
23 April 2018
For the list of impacted securities please refer to Announcement C18012.
CBF will act as Italian tax agent for the above-mentioned Italian T2S-eligible debt securities processed via the link with Monte Titoli. Therefore, the tax reporting obligations must be migrated from CBL (acting as tax agent pre-migration) to CBF (acting as tax agent post-migration).
Clearstream reminds customers that the operational process for this transfer is similar to the process for the first step described in Announcement C18012.
A cutoff on the existing holdings of Italian taxable debt securities deposited with CBL and impacted by the second step of the migration will be performed on 23 April 2018, ensuring that the entire tax process on outstanding accrued interest and issue discount, as well as on the holdings exempted from tax will be carried over from CBL reporting obligations to CBF.
For each impacted security, a fictitious sale followed by a fictitious purchase will be instructed on the global holding.
The maximum tax rate of 26% for private bonds and 12.5% for public bonds will apply for the fictitious sale, thereby generating a debit on the customer’s cash account, followed by the fictitious purchase on the same holding at the same applicable tax rate, thereby generating a credit on the same cash account. The resulting tax amount of these transactions will be nil. Both instructions will be processed with the same requested settlement date as the value date for the cash instructions of 23 April 2018. Two MT566 confirmation messages will be generated in order to provide all the details of the cash instructions processed on the customer’s cash account.
No tax will apply on the fictitious sale and purchase transactions.
Availability of relief based on DL 239/1996 provisions
The tax procedures currently in place and detailed in Clearstream Market Taxation Guide - Italy remain applicable.
For further information, customers may contact Clearstream Banking Client Services or their Relationship Officer.
1. Customers refers collectively to Clearstream Banking S.A. customers and to Clearstream Banking AG customers using Creation Accounts.
2. Clearstream Banking AG (CBF), registered office at Mergenthalerallee 61, 65760 Eschborn, Germany, registered with the Commercial Register of the District Court in Frankfurt am Main, Germany, under number HRB 7500.
3. Clearstream Banking S.A. (CBL) registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.