Italy: The Italian tax on financial transactions

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Italy: The Italian tax on financial transactions

foglia.jpg

valva.jpg

Giuliano Foglia


Giovanni d’Ayala Valva

Anticipating the decision of the Council of the European Union of January 22 2013 as to the implementation in the EU, under enhanced cooperation, of a harmonised financial transaction tax, the 2013 Financial Law (Law No 228 of December 24 2013) introduced into the Italian system a new indirect tax on certain financial transactions (also known as a Tobin tax). On February 1 2013, the Italian Ministry of Economics and Finance posted on its website for public consultation a draft of Ministerial Decree which provides specific and detailed rules aimed at implementing the Tobin tax (the English version of the draft decree is available at http://www.tesoro.it/primo-piano/documenti/draftdecreto__1_2_2013_EN_FINAL_REV.pdf). The final version of the Decree is expected to be enacted by the end of February.

According to the 2013 Financial Law, the Tobin tax shall apply to the following financial transactions:

(i) Equity transactions such as (a) transfer of the ownership of shares (including the acquisition of shares following the conversion of convertible bonds) and equity-like financial securities issued by companies resident in Italy (shares); (b) transfer of the ownership of financial instruments representing shares irrespective of the issuer's residence (for instance American depository receipts);

(ii) Derivatives rransactions such as (a) transactions on financial derivatives having as their main underlying asset shares; (b) transactions on financial derivatives the value of which depends primarily on one or more shares; (c) financial transactions on securities allowing mainly the purchase or the sale of shares or financial transactions that give rise to a cash settlement determined on the basis of shares (for example equity settled derivatives or cash settled derivatives, including warrants, covered warrants and certificates);

(iii) High frequency trading (HFT) of securities under (i) and (ii).

The Tobin tax shall be due irrespective of whether or not the relevant transaction is executed in Italy and regardless of where the parties reside.

The tax rates and the taxable basis shall vary depending on the type of transaction and on the relevant market.

The Tobin tax on equity transactions shall be applicable starting from March 1 2013 at the rate of 0.22% (reduced to 0.2% from 2014). For transactions occurring in regulated markets or multilateral trading facilities established in an EU member state or in a qualified EEA State, the ordinary rate is reduced to 0.12% (reduced to 0.1% from 2014).

The taxable basis for equity transactions is the "value of the transaction" which is defined as (i) the net daily balance of the transactions executed and settled on the same day by the same entity with respect to the same financial instrument; or (ii) the paid price.

The Tobin tax on derivatives transactions shall be applicable starting from July 2 2013 and consists of flat amounts (from €0.01875 to €200) varying on the value of the contract and on the type of financial derivative. The Tobin tax on derivatives is reduced by 20% for transactions executed in regulated markets and in multilateral exchange facilities.

The Tobin tax on HFT shall be applicable from March 1 2013 to transactions occurring in the Italian financial market relating to the securities mentioned above. The tax shall be applied at a 0.02% rate on the counter-value of orders automatically generated by a computerised mathematical algorithm within a certain time frame.

Certain exclusions apply to qualified transactions (such as gifts, inheritances, transactions occurring into the primary market) and qualified counterparties (for example EU central banks, and qualified international organisations).

The taxable person is the transferee for the equity transaction, each counterparty for the derivatives transactions and the person on whose behalf the transactions are executed for the HFT.

Under certain conditions, also non-resident tax intermediaries qualify as withholding agent and as such are responsible for levying and paying Tobin Tax.

Giuliano Foglia (foglia@virtax.it) and Giovanni d'Ayala Valva (dayala@virtax.it)

Vitali Romagnoli Piccardi e Associati

Tel: +39 06 3218022 (Rome); +39 02 58 31 37 07 (Milan)

Website: www.virtax.it

more across site & shared bottom lb ros

More from across our site

Heads of tax need to push their teams forward as strategic business advisers to add value across the organisation, says Sandy Markwick
Scott Bessent reportedly felt undermined by Musk naming Gary Shapley as acting IRS commissioner; in other news, Baker Tilly will combine with a top 15 US firm
The promise of nine years’ tax certainty and a ‘rational and pragmatic’ government process makes APAs a no-brainer, Indian tax advisers tell ITR
Despite garnering significant revenues from multinationals, Italy’s digital services tax presents pressing double taxation issues, say Stefano Simontacchi and Francesco Saverio Scandone of BonelliErede
ITR’s research shows that in-house tax counsel in Asia also feel underserved by their advisers’ international networks
World Tax global head of research Jon Moore tells ITR how his team spots standout submissions, and gives early statistical insights into this year’s entries
Australia’s conservative opposition will repeal controversial tax agent reporting rules if elected in the country’s May general election
Shapley would be the fourth person to hold the job this year; in other news, UK tax advisory firm MHA raised fewer funds than expected from its London IPO
The US needs to be involved in pillar one for there to be more international acceptance of the project, Michael Masciangelo says
The UK regulator is investigating EY’s auditing of the national postal service as it relates to the high-profile Horizon scandal, which saw hundreds wrongfully convicted
Gift this article