Global Tax Alert (News from the Financial Services Group) | 9 January 2014
Italy publishes draft annual return and instructions for financial transaction tax
Taxpayers who are liable for Italian financial transaction tax (IFTT) will no doubt be pleased to see that the draft IFTT annual return and instructions, published by the Italian Revenue Agency on 4 December 2013, appear to require less information to be provided than had been expected. However, the return has only been published in draft, and so may change. In addition, even if the final return remains in the same form as the current draft, taxpayers should ensure that their internal processes enable them to retain all relevant information and documentation in case of a tax audit.
The draft annual return instructions confirm that the filing deadline is 31 March 2014 and the filing must include the following:
- • Equity IFTT and high frequency trading (HFT) IFTT on cash transactions relating to qualifying equities for transactions during the period 1 March 2013 to 31 December 2013.
- • Derivative IFTT and HFT IFTT on equity derivatives and structured notes for transactions during the period 1 September 2013 to 31 December 2013.
This Alert highlights some of the main points emerging from the draft return and instructions.
Responsibility for filing the IFTT return
The instructions confirm the following:
- • The persons responsible for filing the IFTT return are Category I and Category II financial intermediaries as referred to in paragraphs 1 and 2 of the Collection, Payment and Reporting Regulation dated 18 July 2013 (Revenue Regulation)
- • No return needs to be filed if the tax paid is less than €50
- • The amounts shown in the return must be rounded to the nearest unit
A nonresident person can file the IFTT return either through their Italian permanent establishment or through an appointed tax representative. Where a nonresident person has neither a permanent establishment in Italy nor an Italian tax representative, the IFTT return can be filed electronically or directly by registered mail. The envelope should be addressed to Agenzia delle Entrate – Centro Operativo di Venezia, via Giorgio de Marchi n. 16, 30175 Marghera (VE) and should state “CONTIENE DICHIARAZIONE MODELLO FTT” on the envelope.
The IFTT return must be filed by 31 March of each year:
- • Directly, by persons who have sought and obtained authorization from the Italian Revenue Agency; or
- • Through qualified intermediaries, which are part of the taxpayer group or other intermediaries expressly authorized by the Revenue Agency (chartered accountants, trade associations, tax assistance centers, other persons including Monte Titoli).
Once filed, an IFTT return may be subsequently amended or corrected subject to certain specified conditions. IFTT returns filed within 90 days after the deadline (i.e., 31 March) are valid; but penalties will be charged for late filing.
Details of the transactions required to be reported
The draft return is divided into three sections:
1. The first section is divided into 12 sub-sections. A sub-section must be filled in for each month, with the following information:
- • For equity IFTT transactions, the number of transactions, taxable base and tax due
- • For derivative and HFT IFTT, the tax due
- • Total tax due
- • Total tax paid as stated under F24 form or bank transfer
- • Use of previous tax credits (this includes tax credits from the previous month)
- • Any excess tax paid
2. The second section must be filled in with the following information:
- • The tax credit carried forward from the previous year's IFTT return
- • The total tax paid in excess in the year reported
- • Any credit from the previous year that has been utilized in the year reported
- • The tax credit that may be carried forward (for future offsets)
- • The amount of tax credit that is being claimed as a refund
In case of refund claims, a separate form must also be sent to the Italian Revenue Agency containing the taxpayer's bank account information. Nonresident intermediaries who have paid excess tax need to wait for the final return form to be published or an official clarification from the Italian Revenue Authorities that no additional requirements need to be complied with to obtain a refund.
3. The third section is for disclosure of transactions subject to exclusions and exemptions as provided by Annex 8 and 9 of the Revenue Regulation.
The Italian Revenue Agency is expected to issue the final annual return for IFTT (together with official technical instructions) in the near future.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United Kingdom), London
- • Rod Roman
+44 20 7951 1549
- • Geoff Lloyd
+44 20 7951 8736
- • Mark Persoff
+44 20 7951 9400
- • Nigel Nelkon
+44 20 7951 6011
Studio Legale Tributario in association with Ernst & Young, Milan
- • Marco Ragusa
+39 028 814 926
Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Frankfurt
- • Volker Bock
+49 6196 996 27459
- • Thomas Lenz
+49 6196 996 10360
Ernst & Young Société d'Avocats, Paris
- • Matthieu Dautriat
+33 1 55 61 11 90
- • Nacéra Beniken
+33 1 55 61 10 69
Ernst & Young, S.A., Lisbon
- • Nuno Bastos
+351 217 912 000
Ernst & Young Abogados, Madrid
- • Adolfo Zunzunegui Ruano
+34 91 57 27 889
Ernst & Young Steuerberatungs - und Wirtschaftsprüfungsgesellschaft mbH, Vienna
- • Thomas Wilhelm
+43 1 21170 1398
Ernst & Young LLP, Financial Services Desk, New York
- • Miles Humphrey
+1 212 773 1425
- • Raffaele Gargiulo
+1 212 773 3505
- • Sarah Belin-Zerbib
+1 212 773 9835
EYG no. CM4091