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Taxation of the Investment Funds in Italy

Taxation of the Investment Funds in Italy

Updated on Tuesday 20th September 2016

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Taxation-of-the-Investment-Funds-in-Italy.jpgInvestment funds operating in Italy follow the rules and regulations imposed under the European Union’s (EU) directives, including the regulations referring to the taxation of such vehicles. Italian investment funds are taxed in accordance with the characteristics of the vehicle and the residency of the investors. Our team of lawyers in Italy can offer assistance to the businessmen who want to register an investment fund on the local market and one of the main requirements refers to the compliance with the taxation requirements


Taxation of the Italian open-ended funds


Both local and foreign investors can set up open-ended or closed-ended funds. The main characteristic of an open-ended fund refers to the fact that the investors are allowed to issue an unlimited amount of shares. 
The taxation of the investment funds in Italy is performed in a different manner than in the case of commercial companies. If a corporate entity is imposed with the corporate income tax, the investment fund is not required to pay this tax, as the local legislation prescribes a full exemption on this matter. 
However, the investors are imposed with the withholding tax on distribution proceeds applicable at the rate of 26%, but the tax is not available for the collective investment schemes which fall under the regulations of the Italian Unified Banking Act
Foreign investors opening an investment fund in Italy should know that they are subject to the same withholding tax rate, but only in certain conditions, on which our attorneys in Italy can offer more details. It is important to know that non-resident investors can also benefit from a lower withholding tax, if they are the direct beneficiaries of the double taxation treaties signed by Italy with other contracting states. 

Taxation of closed-ended funds in Italy 

Closed-ended funds do not benefit from the same regulations available for the open-ended funds, as the investors are allowed to issue only a certain amount of shares. However, this type of fund is also exempted of the corporate income tax, but the main difference refers to the taxation of the investors. 
Resident investors opening closed-ended funds established as real estate vehicles, who own less than 5% of the net assets of the fund, are imposed with a 20% withholding tax on distribution proceeds. 
Businessmen interested in receiving more information on the taxation of the investment vehicles available in this country are invited to contact our law firm in Italy for legal assistance. 


  • Andreas 2016-09-20

    I'd be interested to know which are the main advantages of a fund registered as an closed-ended structure.

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