Debt securities - rates, eligibility, availability of relief etc. - Italy
Withholding Tax
As of 1 January 2012
| Standard rate of withholding tax: | 12.5% / 26% a | Holding requirements / restrictions: | No |
a. Applicable to corporate bonds from 1 July 2014; between 1 January 2012 and 30 June 2014 the applicable rate was 20%.
1. Public debt and corporate bonds
The standard rates of withholding tax on interest from public debt and corporate bonds are as follows:
- 12.5% applicable to Italian government bonds or public debt equivalent (municipal bonds, provincial bonds, bonds issued by officially recognised organisations (for example, BEI, BIRS etc.)).
or:
- 26% applicable to all corporate bonds regardless of maturity.
Note: Corporate bonds subject to art. 26 of Presidential Decree 600/1973 with a maturity of less than 18 months are treated differently according to their issuance date, as follows:
- Bonds issued before 1 January 2012 remain subject to Presidential Decree 600/1973 and the 26% rate is applied at source by the issuer on each coupon; or
- Bonds issued on/after 1 January 2012 become subject to Legislative Decree 239/1996 and the 26% rate is applied by the second level bank (that is, LuxCSD) pro-rata temporis.
A 0% rate is applied by LuxCSD to the following bonds subject to Legislative Decree 505/1999:
- Corporate bonds issued by non-Italian corporations and deposited with the Italian CSD;
- Bonds issued by foreign governments of “white list” countries and deposited with the Italian CSD;
- Bonds issued by the Republic of Italy or other Italian issuer and listed outside Italy.
Important note:
Interest from securities subject to Legislative Decree 505/1999 is paid by LuxCSD without any deduction of Italian tax, regardless of the fiscal status or residency of the final beneficial owners.
By holding such securities on behalf of beneficial owners who are residents of Italy, customers agree that it is their responsibility to ensure that Italian beneficial owners comply with all legal and regulatory requirements imposed by Italian law in respect of withholding tax through their annual fiscal declaration. Neither LuxCSD nor its local tax representative has any direct or indirect liabilities towards the Italian Tax Authorities in this regard.
2. Eurobonds
The standard rate of withholding tax on Eurobonds subject to Legislative Decree 239/1996 and to Presidential Decree 600/1973 (which, between 1 January 2012 and 30 June 2014, was 20%) is, from 1 July 2014, 26%.
Note: Eurobonds subject to art. 26 of Presidential Decree 600/1973 with maturity less than 18 months are treated differently according to their issuance date, as follows:
- Eurobonds issued before 1 January 2012 remain subject to Presidential Decree 600/1973. The 26% rate is applied at source by the issuer on each coupon and LuxCSD pays the amounts as received from the common depositories.
- Eurobonds issued on/after 1 January 2012 become subject to Legislative Decree 239/1996 and the 26% rate is applied by the second level bank (that is, LuxCSD) pro-rata temporis.
Up to 31 December 2011
(This information is to be used for standard refund applications.)
| Standard rate of withholding tax: | 12.5% / 27% | Holding requirements / restrictions: | No |
1. Corporate bonds
The standard rates of withholding tax on interest on government and corporate bonds were as follows:
- 12.5% applicable to:
- Corporate bonds subject to Legislative Decree 239/1996 issued by Italian banks and Italian companies whose shares were listed on an Italian regulated market, with a maturity of 18 months or longer;
- Corporate bonds subject to art.26 of Presidential Decree 600/1973 issued by Italian companies whose shares were not listed on an Italian regulated market, with a maturity of 18 months or longer and having:
- If listed on an EU regulated market or subject to a public placement, a yield to maturity calculated at issue less than or equal to the double of the official rate of discount;
- If not listed on an EU regulated market or not subject to a public placement, a yield to maturity calculated at issue less than or equal to the official rate of discount incremented by two thirds;
- 27% applicable to:
- Corporate bonds subject or not to Legislative Decree 239/1996 issued by Italian banks and Italian companies whose shares were listed on an Italian regulated market, with a maturity of less than 18 months;
- Corporate bonds not subject to art.26 of Presidential Decree 600/1973 issued by Italian companies whose shares were not listed on an Italian regulated market, with a maturity of less than 18 months and having:
- If listed on an EU regulated market or subject to a public placement, a yield to maturity calculated at issue less than or equal to the double of the official rate of discount;
- If not listed on an EU regulated market or not subject to a public placement, a yield to maturity calculated at issue less than or equal to the official rate of discount incremented by two thirds.
2. Eurobonds
The standard rates of withholding tax on interest on Eurobonds were as follows:
- 12.5% applicable to Eurobonds subject to Legislative Decree 239/1996;
- 27% on atypical Eurobonds subject to Legislative Decree 512/1983, withheld by the issuer.
Availability of relief
Click on the image to view the diagram showing the availability of relief at source and/or reclaim of withholding tax on income from Italian debt securities.
a. A White List country is one that has a DTT with Italy providing for an adequate exchange of information between tax authorities.
| Eligible beneficial owners | Relief at Source | Quick Refund | Standard Refund |
Residents of a White List country | Yes | No | Yes |
Central banks and other entities that manage state reserves | Yes | No | Yes |
Supranational organisations recognised by Italian law | Yes | No | Yes |
Italian resident corporations | Yes | No | No |
Note: Standard refund is available only on securities subject to Legislative Decree 239/2003.
Securities subject to Legislative Decree 239/1996
Exemption at source is available if:
- The beneficial owner is:
- A supranational organisation recognised by Italian law; or
- A central bank or other entity that manages state reserves; or
- A resident of a White List country (resident of a country that has a Double Taxation Treaty (DTT) with Italy including an exchange of information provision or resident of a country that has an exchange of information agreement with Italy); or
- An Italian resident corporation;
or if:
- The customer of LuxCSD is an Italian financial institution.
Exemption at source is available only if the appropriate documentation is submitted to LuxCSD.
A full reclaim of withholding tax is available if the beneficial owner is:
- A supranational organisation recognised by Italian law; or
- A central bank or other entity that manage state reserves; or
- A resident of a White List country (resident of a country that has a Double Taxation Treaty (DTT) with Italy including an exchange of information provision or resident of a country that has an exchange of information agreement with Italy).
A reclaim of withholding tax is available if an exemption at source has not been obtained by a beneficial owner eligible for exemption. The customer can reclaim withholding tax on behalf of the beneficial owner through LuxCSD by submitting the appropriate documentation.
Customers should be aware that the Italian Tax Authorities' requirements and interpretation of the applicable laws may be subject to changes. In order to safeguard the interests of our customers and to avoid rejections of withholding tax reclaims, customers are strongly recommended to certify their accounts for tax exemption at source and to avoid the standard refund applications. LuxCSD cannot accept responsibility for the acceptance or non-acceptance of tax reclaims by the Italian Tax Authorities.
Residents of Italy cannot reclaim withholding tax through LuxCSD.