The Circular clarifies various interpretative doubts in relation to the regulatory changes that have occurred in the last year and which have concerned trusts mainly on income taxes, the discipline of fiscal monitoring and the IVAFE, the wealth tax on financial assets, especially those held abroad, and the IVIE, the wealth tax on foreign real estate, both taxes due by trusts resident in Italy.
The Agency launch an open consultation on its official website - The text of the Circular, still in draft form, will be publicly accessible for consultation on the website of the Revenue Agency. Interested parties, business and financial operators, consulting companies and law firms, will have time until 30th September 2021 to send their comments and proposals either to amend the draft text or to add further regulatory passage. All these suggestions or inputs will then evaluated by the Agency, in view of their possible use in the drafting of the Circular in its ultimate version.
How to send proposals to the Agency – New insights and suggestion on how to modify the Circular draft can be sent to the following email address dc.pflaenc.settoreconsulenza@agenziaentrate.it. Once the public consultation phase will be over, the Revenue Agency will publish the comments received, excluded those containing an express request for non-disclosure.
Tax discipline of trusts - The fiscal discipline of the trust has recently been the subject of interventions by the Italian Legislator as well as several rulings of the Italian Supreme Court, orCassazione, especially in relation to indirect taxation. Indeed, according to the Italian rules, trusts are generally subject to different tax regimes depending on whether the beneficiaries are identified and have an actual right to the amounts (so-called transparent trust) or not (so-called opaque trust). In the case of transparent trusts, tax is levied on the beneficiaries on an accrual basis, for IRPEF purposes, while for opaque trusts taxes would be paid at the level of the trust, therefore for IRES purposes. In addition, the Italian recipient of a distribution from an opaque trust would be taxed in Italy, provided that the trust is located in a tax haven. The scope of this provision was to hit trust structures located in tax havens by derogating to the ordinary trust taxation principles so as to create a peculiar tax regime for anti-avoidance purposes. Unfortunately, this regime lacks clarity as it does not specify whether potential foreign withholdings can be deducted and what definition of “tax haven” should be considered for its purposes. Furthermore, the present legislation does not clarify the territoriality rules applicable to foreign-sourced incomes derived by foreign trusts. In the light of all these doubts and critical issues, the new Circular is expected to provide a wide range of clarifications.
Stefano Latini