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Securitization transactions: Italian tax authorities clarify ReoCos tax treatment

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February 2019


The Italian tax authorities, replying to two ruling requests (Responses n. 18, dated January 30, 2019 and n. 56, dated February 15, 2019), clarified the tax treatment of proceeds derived from activities performed by companies established pursuant to Article 7.1, paragraph 4, of Italian securitization law (‘Law n. 130/99’). Such companies generally are referred to as real estate owned companies (‘ReoCos’).

According to Law n. 130/99, in the context of a securitization transaction, special purpose vehicles (‘Law 130/99 SPVs’) always had the exclusive purpose of performing one or more loan securitization transactions. However, Article 7.1, paragraph 4, of Law n. 130/99 recently was introduced to allow, within the framework of certain loan securitization transactions, creation of a corporate vehicle (a ‘Securitization ReoCo’). The sole purpose of these vehicles is purchasing, managing, and increasing the value of, among others, real estate properties used as collateral to secure the loans purchased by the Law 130/99 SPV, in the exclusive interest of the securitization transaction. 

The takeaway

Investors that have an existing Securitization ReoCo structure in Italy or that are considering a new or a similar structure should consider the Italian tax authorities’ position. They should consider the possible income tax consequences and applicable accounting treatment, as well as possible other tax consequences deriving from framework agreements to be entered into with Law 130/99 SPVs.

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Emanuele Franchi

Partner, PwC Italy

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