Operational Tax News

Operational Tax News

Proposed amendments to Italian taxation of dividends and capital gains for European UCIs

The first draft of the 2021 Italian Budget Law, made available on 13 November 2020, includes a proposal to amend the current tax regime applicable to dividends and capital gains realised by certain European UCIs from Italian companies.

Under current law:

  • Dividends distributed by Italian companies to foreign UCIs are subject to the ordinary 26% WHT, with possible DTT reductions;
  • Capital gains realised from the sale of “qualified” interests (generally, interests that represent more than 20% of voting rights - 2% in case of listed company - or more than 25% of share capital - 5% in case of listed company) by foreign UCIs are subject to the ordinary 26% substitutive tax, with the potential for the allocation of taxing rights to the seller jurisdiction, based on the DTT (i.e. no Italian tax);  
  • The eligibility for DTTs for CIVs is not straightforward and, depending on the case, it may result that DTT protection is not available.

Draft law:

  • The proposal in the Draft Budget Law includes provisions under which no WHT on dividends and no substitutive tax on capital gains would apply in the hands of a UCI established in the EU (or in the EEA, where exchange of information is permitted). The vehicle should comply with the UCITS IV Directive or should be managed by an AIFM.
  • The proposals aim to bring the treatment in line with investments held by regulated Italian UCIs and to address potential EU non-discrimination issues. 

·         If passed, the rules should apply from 1 January 2021.


Source:  Operation tax law, Deloitte Luxembourg, tax services


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