- In force for shares and equity instruments
- Planned entry into force on July, 1, 2013 for derivatives
24 December 2012
Law No. 228
Type of Tax
In scope instruments
- Shares and participating financial instruments issued by Italian resident companies and, in the case of listed shares only, by Italian companies with an average market capitalization of more than EUR 500 million
- Other financial instruments representing those securities, irrespective of the place of their execution and of the residence of the parties involved (e.g. ADRs, GDRs, EDRs)
- Derivatives whose underlying assets are mainly shares, participating financial instruments and other financial instruments (see above) or the value of which depends primarily on the mentioned equity instruments.
- Certain high-frequency trading transactions in shares, other equity instruments and equity derivatives
Taxable event (transaction)
- Transactions of shares and financial instruments
- Transactions of derivatives
- High-frequency transactions executed on the Italian financial market
Territorial connection for liability – condition for taxability is:
Residence of issuer?
The tax applies to shares and participating financial instruments issued by Italian resident companies, determined on the basis of their legal seat. However, the tax applies to securities representing the shares and participating financial instruments irrespective of the residence of the relevant issuer. Location of transaction (e.g. traded on local stock exchange)?
Location of transaction (e.g. traded on local stock exchange)?
Location of party (e.g. at least one party to the transaction is resident)?
Residence of financial intermediary?
Other relevant conditions for taxability
In the case of listed shares, the tax applies to companies with a market capitalization in November of the previous year of more than EUR 500 million.
- purchase of newly issued shares, also through the conversion of bonds or the exercise of an option by the shareholder, or if it constitutes a mode of settlement of financial derivatives;
- transactions of issue and cancellation of shares, financial instruments and other transferable securities, including the repurchase of securities by the issuer.
- transfers by way of gift or inheritance;
- transactions in bonds and debt securities
- repos and securities landing;
- transactions made between related parties;
- transactions deriving from reorganization operations, as defined by article 4 of Council Directive 2008/7/EC of 12 February 2008 concerning indirect taxes on the raising of capital, or from merger and demerger of collective savings investments entities;
- transactions of shares negotiated on regulated markets and issued by companies whose average market capitalization (in November of the year preceding the sale) does not exceed EUR 500 million;
- transactions of securities representing equity investment or participating financial instruments issued by companies, with average capitalisation - in the month of November of the year preceding the moment of the transfer of ownership - lower than 500 million euro.
- transactions involving EU institutions, the ECB, central banks of EU Member States, central banks and organizations managing the official reserves of other States or institutions established by international agreements executed by Italy;
- transactions on qualifying ethical financial products;
- market making activities, as defined by article 2(1)(k) of Regulation (EU) No. 236/2012 of the European Parliament and of the council of 14 March 2012 on short selling and certain aspects of credit default swaps;
- entities acting to support the liquidity of issued shares, as recognized by the Directive 2003/6/CE of the European Parliament and Council of 28 January 2003 on insider dealing and market manipulation (market abuse) and the Commission Directive 2004/72/EC of 29 April 2004;
- pension funds and similar entities established in an EU Member State or in a EEA state that is included in the white list.
In cases 1 and 2 the FTT is not payable by either party, while in cases 3, 4 and 5 the exemption is granted only to person carrying on the mentioned activity.
Person responsible for collecting/remitting tax
The FTT must be paid by banks, investment companies, notaries and other intermediaries directly involved in the transaction. If multiple intermediaries are involved in the same transaction, the FTT must be paid by the intermediary that receives the execution order from the purchaser or the final counterparty.
Same as the persons responsible for collecting/remitting tax.
However, according to article 19(4) of the Ministerial Decree, non-residents involved in a financial transaction are deemed to be the purchaser or the final counterparty of the execution order if established in a state which does not fulfill the exchange of information requirements, i.e. a State not included in the list provided by the Directorial Decree No. 2013/26948, released on 1 March 2013 by the Italian tax authorities.
Person who in practice bears the tax
- The FFT levied on shares and equity instruments is due by the final purchaser
- The FTT levied on derivatives is due by each counterparty to the transaction
The tax is paid by the intermediary by the 16th day of the month following the transaction.
Penalties in case of failure to file/pay
The provisions relating to VAT apply, as they are compatible.
In case of delayed, insufficient or omitted payment of the tax, penalties apply exclusively to the persons having to comply with such obligation and also liable for the payment of the tax. These persons may suspend the execution of the transaction until they get funding for the payment of the tax. In case of insufficient or omitted payment of the tax, the tax administration has the authority to recover the tax together with interest from the taxpayer concerned.
For the sale of shares and other equity securities, the FTT applies on the value of the transaction, i.e. the net daily balance of transactions on the same financial instrument executed by the same subject, or the consideration paid for each trade.
For transactions involving derivative contracts, taxation is fixed and determined by the type of derivative and its notional value.
Standard FTT rates:
- 0.2 percent (0.22 percent for 2013) for over-the-counter transactions;
- 0.1 percent (0.12 percent for 2013) for transactions executed on regulated markets or a multilateral trading facility established in a Member State that is included in the white list.
Rates for derivatives. The FTT applies at varying fixed amounts depending on the type of derivative and its notional value:
- up to EUR 200 (per party) for transactions exceeding EUR 1 million for over-the-counter derivatives;
- a reduced rate of 20 percent of the ordinary fixed rate on a conventional tax base for derivatives executed on a regulated market or multilateral trading system.
Rates for high frequency trading: a separate 0.02 percent tax is imposed on this kind of transaction.