In the late evening of 12 December, 2012, the Italian Government filed the long-awaited FTT amendment with the Senate Commission. While this amendment is theoretically still subject to change in the Senate and in the Chamber of Deputies, as a practical matter it should not be altered substantially. A Ministerial Decree should be published within 30 days from the entry into force of the budget law, further defining the technicalities of the Italian FTT.
In overview, the amendment contains a number of changes to the original draft law, some of which (in particular the later start date) will be very much welcomed by financial services institutions.
The key points of interest are as follows:
- The concerns of the industry regarding the proposed start date of 1 January 2013 have been addressed. The start date has been deferred to 1 March 2013 for transactions over equities, with a start date of 1 July 2013 for transactions over derivatives. Clearly the time remaining before the law takes effect is still tight, but this change will allow those institutions affected some additional time to prepare for the new regime.
- The tax on equity transactions is in many respects similar to the charge on equity transactions under the French FTT. Institutions should therefore be able to build upon some of the work done already in preparing for the French FTT.
That said, the Italian FTT includes different tax rates for transactions executed on a recognised stock exchange and transactions executed OTC. This is likely to make compliance with the regime more complex.
- The Italian FTT is the first FTT regime to apply to a wide range of derivative transactions. In this respect, the Italian FTT could be seen as closer to the proposed EU FTT than the traditional “stamp duty style” FTTs, such as the French FTT introduced in August 2012.
- The regime applies higher rates for equity transactions undertaken in 2013 than in future years, so as to compensate for the loss of revenue resulting from the later start date.
- Bonds and fund units remain outside the scope of the regime.
- The regime provides for an exemption for market makers, which broadly mirrors the corresponding exemption under the French FTT.
- We await the release of the Ministerial Decree which will provide further details of the operational aspects of the Italian FTT regime.
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