Clifford Chance
Securing the WHT exemption on Italian Bonds in practice
5 June 2017
Disclaimer: The statements herein are based on the laws and/or interpretations in force in Italy as of the date hereof and are subject to any changes in law or interpretations occurring after such date, which changes could be made on a retroactive basis. This memorandum is provided for information purposes only and cannot be relied upon in the decision to subscribe for, purchase, own or dispose of Italian Bonds and does not purport to deal with the tax consequences applicable to all categories of investors. Prospective purchasers of Italian issued bonds should consult their own tax advisers concerning the overall tax consequences of their ownership of the Bonds.
Note: the procedure to ensure gross payment on Italian Bonds is reliant on the proper clearance of the account where the relevant securities are held in custody. Prospective Noteholders who have already cleared their account status, as described in paragraph 5 below, in relation to prior Italian bond transactions would normally only be required to hold the Bonds in custody on the previously cleared account.
Foreword
- Under Italian law ("Decree 239/1996") interest, premium and other income (including the difference between the redemption amount and the issue price) (hereinafter collectively referred to as "Interest") from Italian Bonds are subject to a 26% substitute tax when received by, among others, non-Italian resident persons not acting through a permanent establishment in Italy.
- The substitute tax applies not only upon payment of the coupon, but also upon redemption and transfer of the Bonds.
- The substitute tax is applied by the Italian bank or other financial intermediary, or Italian permanent establishment of a foreign bank or financial intermediary, that intervenes in the payment of the relevant income.
