ITALY Law and Practice Contributed by: Emidio Cacciapuoti, Giorgio Bobba and Davide Massiglia, ADVANT Nctm
The tax regime applies to directors and/or employees of entities who have a direct or indi - rect control, management or advisory relation - ship with the fund (or its manager/adviser). The conditions required to “secure” the qualification as income from capital are as follows: • carry holders must commit themselves to actually invest an amount equal to at least 1% of the total investment of the fund; • proceeds from the units will be payable only if all investors have received full repayment of the invested capital and a certain return (“hur - dle”) provided under the relevant by-laws/ rules of the fund; and • a five-year minimum holding period is observed, or, in a change-of-control scenario, the units are held until that date. In determining the 1% threshold, relevance will also be attributed to: • ordinary units in the funds, held by the carry holders (ie, co-investments); and • the value of the (ordinary or carry) units attrib - uted to the carry holders as a benefit in kind and taxed as employment income. If the above requirements are not met, analysis will be carried out on a case-by-case basis to assess whether there is any risk that the car - ry proceeds may be qualified as employment income, subject to: • personal income tax at progressive tax rates (eg, equal to 43% on taxable income exceed - ing EUR50,000); • a 10% surcharge applicable on employment income received by managers of entities operating in the financial sector (eg, banks and AIFMs) when the variable compensa - tion (eg, bonuses and stock options) of the
manager exceeds one time their annual fixed salary; and • related local (eg, municipal and/or regional) surcharges (if applicable). Other Taxes No stamp duty, registration duty or other duties, taxes or fees are required to be paid upon the subscription of the fund units. No capital duty is levied on the subscription of the fund units or the drawdown payments to be made by the investors into the funds. As a general rule, the execution of the documen - tation connected with the investment into the fund units is not subject to Italian registration tax. Where the execution of the documentation is carried out through either a notarial deed or a notarised agreement, registration tax will be due, at a fixed amount equal to EUR200. Non- notarised agreements are subject to registration tax, at a fixed amount equal to EUR200, only in the case of use. Both Italian resident investors and non-Italian resident investors who fall within the definition of “clients” for regulatory purposes are subject to Italian stamp duty on periodical communications related to fund units. The stamp duty at hand is applied on a yearly basis by the management company at a rate of 0.2%, on a taxable base equal to the fair market value of the fund units and, in the absence thereof, to their nominal or reimbursement value as periodically communi - cated by the management company. The stamp duty due from “clients” other than individuals is capped at EUR14,000. The transfer of fund units is not subject to the Italian financial transaction tax, ordinarily applied at a rate of 0.2%.
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