Italy: Clarification of the tax treatment of BTP Italia indexed to Italian Inflation

10.09.2012

We have received clarification from our local depository concerning the tax treatment of the BTP Italia indexed to Italian Inflation1 with a revaluation mechanism of the principal subscribed on a semi-annual basis and reimbursement, in a single payment at maturity, on the nominal non-revalued face value basis.

There is a common understanding in the market, with regard to the transfer of the bond and the coupon payment, that, for taxable bondholders, tax is applied on the accrued interest and on the potential revaluation of the principal on the basis of the following rules:

  • Accrued interest, calculated on the nominal revalued face value basis, is always subject to taxation according to Decree Law 239/96 (12.5% tax rate).
  • Any capital revaluation is considered as follows:

    • Transactions with settlement date from the first business day of the month of coupon payment are considered subject to Decree Law 239/96.
    • Transactions with settlement date up to the last business day of the month before coupon payment are considered subject to Legislative Decree 461/97 and treated as capital gains and, in such cases, the revaluation is added to the clean price of the trade.

Example: First issue BTP Italia indexed to Italian Inflation with “special” ISIN IT0004806896 and regular ISIN IT0004806888:

  • Settlement activity from 03/09/2012 until 25/09/2012: capital revaluation subject to DL 239/96.
  • Settlement activity up to 31/08/2012: any gain accrued is considered subject to LD 461/97.

Note: The website of the Department of the Treasury related to the Indexation coefficients for BTP for every issue is: http://www.dt.tesoro.it/en/debito_pubblico/dati_statistici/coefficienti_indicizzazione_btp_italia.html.

The above rules will be applied to the following two government BTP Italia bonds currently on the market:

  • BTP Italia - first issue BTP Italia indexed to Italian Inflation with “special” ISIN IT0004806896 and regular ISIN IT0004806888 - for trades settled within the month of each coupon payment (first coupon - from 3/9/2012 to 25/9/2012);
  • BTP Italia - second issue BTP Italia indexed to Italian Inflation with “special” ISIN IT0004821424 and regular ISIN IT0004821432 - for trades settled within the month of each coupon payment (first coupon - from 3/12/2012 to 10/12/2012).

The same rules will be applied to future issues of similar securities.

Further information

For further information, cuatoomers may contact the Clearstream Banking2 Tax Help Desk on:

LuxembourgFrankfurt
Email:tax@clearstream.comtax@clearstream.com
Telephone:+352-243-32835+49-(0) 69-2 11-1 3821
Fax:+352-243-632835+49-(0) 69-2 11-61 3821

or Clearstream Banking Customer Service or their Relationship Officer.

1. FOI ex-tobacco Index – Indice dei prezzi al consumo per le famiglie di operai ed impiegati al netto dei tabacchi.
2. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in the Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking, société anonyme, registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).

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