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Tobin Tax Hits Italy

15 Mar 2013
Recent provisions have been introduced to implement a tax on transfers of shares, the so called "Tobin Tax".

Starting from 1 March 2013, the Tobin Tax will be applied to the transfers of shares issued by Italian corporate companies (only joint stock companies, eg in Italy "Societ? per azioni") excluding limited liability companies and partnership companies. This tax will also be applied on transfers of securities that are representative of shares or financial instruments independently of the residence of the issuer. Taxand Italy details the changes, and the impact that the Tobin Tax could have on businesses operating within the jurisdiction.

The Tobin Tax is not due on the transfers of quotas of Italian limited liability companies, or on transactions of quotas of Investment Funds, as defined by UCITS Directive.

The tax rate on shares and financial instruments negotiated over the counter in 2013 is 0.22%. Starting from 2014, this rate will be reduced to 0.20%. With reference to transactions of shares listed in the Stock Exchange, the tax rate for 2013 is 0.12%; for 2014 this rate will be reduce to 0.1%.

From 1 July 2013, the Tobin Tax will also be applied to certain derivatives. In this case the tax due to be paid is EUR 200 for each transactions. The Italian government specified the application of the Tobin Tax in Italy with a Decree issued at the end of February.

Your Taxand contacts for further queries are:
Guido Arie Petraroli
T. +39 02 7260591

Cristina Periti
T. +39 02 7260591

Silvia Candeloro
T. +39 02 7260591

Taxand's Take

The Tobin Tax might discourage investments by non - residents into Italian companies in favour of companies resident in countries where such tax will not be applied. Businesses with operations in Italy should take note of these impending changes to ensure compliance.

In fact, in the first day of implementation of Tobin Tax, it has been noted that the number of transactions in the Italian Stock Exchange have been lower than the number of transactions in previous days.

Moreover, it should be noted that under the enhanced co-operation procedure formally approved by the European Commission, other Member States could implement a Financial Transaction Tax (thereinafter, "FTT"). These Member States form the so-called "FTT Zone" considered that if other jurisdictions, such as the UK, do not agree to introduce FTT, it is possible that the investments in the companies residents in the FTT Zone will decrease in favour of the companies residents in non - FTT Zone.

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