Law number 228, of December 24 2012 (the 2013 Stability Law) has introduced provisions regarding a new financial transactions tax (FTT) as part of the austerity measures and tax hikes recently implemented.
The FTT (which is non-deductible for the purpose of income taxes) is levied by banks and other authorised intermediaries intervening in the relevant transactions or, in the absence of intermediaries, is paid directly by the relevant taxpayer.
The FTT applies to the following transactions and according to the following rules:
1 The transfer of title of (i) shares and equity-like financial instruments issued by Italian resident companies and (ii) securities representing such shares and equity-like financial instruments regardless of the residence of the relevant issuer (collectively, securities) is subject to FTT.
For 2013, the FTT is levied at a rate of 0.22% (0.2% starting from 2014) of the value of the transaction, which is determined on the basis of (i) the net balance of daily transactions relating to the same security or (ii) the consideration paid.
The above rate is reduced to 0.12% for 2013 (0.1% starting from 2014) for transactions entered into on regulated markets.
The FTT is due by the purchaser of the securities, irrespective of the relevant country of residence and the place of execution of the transaction.
A number of exemptions from the application of FTT are also provided (such as transfers by reason of death or gift and the issuance and cancellation of securities).
2 Derivative transactions having as main underlying, or the value of which is mainly linked to, securities (derivatives), are subject to the FTT levied at the fixed rates set forth by the 2013 Stability Law, which vary according to the type and the notional value of the relevant transaction.
The rates are reduced in respect of derivatives entered into on regulated markets.
The FTT on derivatives is due by each contracting party regardless of the relevant country of residence and the place of execution of the transaction.
The FTT on derivatives will apply as of July 1 2013 and is subject to a number of exemptions.
3 High frequency transactions carried out on Italian financial markets and relating to securities and derivatives are also subject to the FTT.
The definition of high frequency transactions is specified in the decree of the Ministry of Economy and Finance of February 21 2013.
The FTT on high frequency transactions applies at a rate of 0.02% on the value of cancelled or amended orders which exceed, during any given trading day, the threshold specified by the above decree and is due by the person making the orders.
The FTT on high frequency transactions relating to securities entered into effect as of March 1 2013, while the FTT on high frequency transactions relating to derivatives will enter into effect as of July 1 2013.
Susanna Beltramo and Bruno Zerbini