Investor tax reporting services
Under the Italian tax law, profits deriving from Italian, EU and EEA mutual funds are generally subject to a 26% Withholding tax (WHT) rate. However, the tax reporting regime makes possible to: (i) reduce the effective tax rate; (ii) exempt a portion of the NAV from the inheritance tax; (iii) avoid WHT on capital repayments in case of distributions.
Furthermore, the Italian tax law provides a special tax regime for PIR and ELTIF Funds.
Italian tax reporting
Key Features
Target investors |
Retail / Institutional |
Up-front registration |
❌ |
Taxation mechanism |
Asset based |
Annual/Semi Annual reporting |
✅ |
Main features
Italian Asset Test (also called "IRRP" or "Biannual Tax Reporting")
Fund investors can benefit from a lower tax rate (12,5% instead of 26%) profits deriving from funds that invest in certain eligible bonds—mainly government bonds and bonds issued by supra-national bodies. For this purpose, following a specific methodology set by the Italian tax law, an asset test—ratio related to the investments in eligible bonds held by the fund—should be calculated and reported twice a year to the Italian paying agents.
Inheritance Tax Reporting
Inheritance tax applies to transfers of property and rights (worldwide) upon the Italian resident’s death. As for direct investments, “indirect” investments in bonds and other eligible securities issued by EU and EEA Member States are excluded from the inheritance estate and, therefore, not subject to inheritance tax. For this purpose, a percentage related to qualifying bonds held by the fund should be calculated as of the day of death and provided to the heir investor.
Distribution Reporting - Split between "Income from Capital" and "Capital Repayment"
From an Italian tax perspective, when an Italian individual investor holds shares or units of an Italian, EU or EEA mutual fund, taxable income that may derive from such investment qualifies as “Income from Capital” (subject to a 26% WHT). On the contrary, Capital Repayments should generally not be subject to WHT. For this purpose, in case of interim cash distributions, the fund or the fund’s management company may provide a declaration stating the portion of “Income from Capital” (taxable) and the portion of “Capital Repayment” (non taxable).
Benefits of the regime
Fund’s investors can benefit from a lower tax rate (12,5% instead of 26%) on distributions and capital gains from the fund to the extent that those relate to investments in certain eligible bonds (mainly government bonds and bonds issued by supra-national bodies).
PIR Regime - tax-exempt investment plan for Italian retail investors
The PIR ("Piani Individuali di Risparmio") regime is a special tax incentive scheme for long-term savings plans (at least 5 years) which allows a relief on Income and Inheritance tax for individuals.
Scope of services
- Classification and calculation of the “bond ratio” according to the Italian regulation;
- Breakdown of the distributed amount to determine the portion of income from capital and capital repayment;
- Inheritance tax reporting;
- Regulatory watch on tax and fund reporting;
- Consultancy and fund structuring.
Regulatory reporting services
COVIP reporting for Italian pension funds - Circular COVIP n. 250 of 11 January 2013
Key Features
Target investors |
Pension Funds |
Periodicity |
Quarterly |
Deliverable |
Compilation of a specific template (3 worksheets) |
Format |
Standard excel format |
Main features
COVIP, the Supervisory Board on pension funds, is the authority dedicated to overseeing the proper functioning of the supplementary pension system. Italian pension funds are required to monitor the economic exposure of their portfolio in line with rules on the investment criteria and limits of the pension funds’ assets. To meet their requirements, Italian pension funds, which are investors in investment funds, will ask the asset manager to provide them with a report including a detailed asset classification
Both quarterly and annually issued, this reporting is not mandatory per se.. However, all funds targeting pension fund investors will have to comply with the COVIP requirements.
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