The Circular seems to reflect many of the instances of professionals who, including our firm, have contributed to the tax dialogue on the subject after the initial official draft was published on August 11th, 2011.
Indeed, the Agency must be credited with a strong focus on making their interpretation clear, thus contributing to improve the dialogue with taxpayers and making these international tools even more attractive for clients, both with a domestic or international setting.
In particular the Italian Tax Authorities:
· Gave clear guidelines on commercial e non commercial trusts
· Clarify tax residence and coordination with previous guidelines, with a particular attention to “opaque” and “transparent” trust for direct taxation purposes.
· Clarify the opportunity to keep dinstinction between “capital” and “income” accounts, according to Italian tax rules.
· Confirmed the definition of “Low Tax Jurisdiction” for the tax residence of foreign trusts.
· Clarify the meaning of discretionary trusts.
· About indirect taxation:
– Clarified that no tax is to be given at disposition time (“entry”)
– Clarified that taxes, as regulated by Italian TUS (e.g. IHT and Gift Tax) are to be paid on the value at “exit” time.
– “Exit” is to be regarded when a pemanent “stable” attribution is given to beneficiaries, opening to the concept of vested and unvested beneficiaries for tax purposes too.
– Conveniently distinction between “capital” and “income” for IHT and Gift Tax too.
· About fiscal monitoring confirmed the rules and shared some peculiarities with exchange of information (eg. CRS) and trusts.
· Gave interesting confirmation about the meaning of interposed trust, with useful bestpractice for foreign individuals and/or individuals who moved their residence to Italy (eg. New Tax Resident with 100k flat taxation).
Edited by Desk Italia