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Draft Italian budget law contains provisions likely to foster investments by EU investment funds into Italian companies



The draft Italian budget law for 2021 ("Bill") contains provisions likely to foster investments by European investment funds into Italian companies.

More particularly when it comes to Luxembourg funds, Luxembourg UCITs under EU Directive 2009/65/EC and Luxembourg alternative investment funds (such as a RAIF) managed by an authorized AIFM under EU Directive 2011/61/EU may benefit from a full dividend withholding tax exemption on Italian source dividends and a full capital gains tax exemption on the disposal of the shares held in Italian companies.

These exemptions aim at aligning Italian tax treatment applying to non-Italian EU/EAA investment funds with the tax treatment applying to Italian investment funds, and has to be seen in the context of the European Court of Justice's approach adopted since the Aberdeen Property Fininvest Alpha Oy case in case of tax discrimination towards foreign funds' investments and the more recent infringement procedure that the EU Commission started against France on a 3% dividend tax.

The benefit of the new measures which is expected to be as of 1 January 2021 requires, i.a., that an adequate exchange of information is ensured.

Ingrid Dubourdieu
Managing Partner Fieldfisher (Luxembourg) S.C.S.
M:+352 621 359 076

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