26 February 2008 Beatrice Puoti-ffiske STEP Italy – The use of English Trust Structures

Fiscal Aspects of Trusts in Italy GENERAL Law 296/2006, Circolare 48/E 6 August 2007 Circolare 3/E 22 January 2008 Applicability to Trusts and “Similar Institutions”

Residence Place of administration Main object Legal seat Deemed residence if: Italian resident Settlor, Italian resident Beneficiary and not white listed Trustee; or Italian Resident adds Italian real estate Proof to the contrary

Direct Taxes IRES Opaque trusts – discretionary Transparent trusts – fixed income interest Revocable trusts – settlor Income taxed on trust – not taxed on Beneficiary Income distributed to Beneficiaries only taxed if within one of the income categories for Italian purposes

Indirect Tax IMPOSTA DI REGISTRO/CATASTALE Creation of trust – if no transfer of value - €168 Transfer of value – usual provisions GIFT TAX/INHERITANCE TAX Transfer of assets into trust – purpose trust, discretionary trust, non-related Beneficiaries - 8% If final Beneficiaries determined – rate depends on blood relationship Transfer of assets to Beneficiaries – no further tax No tax on transfer of family company or shares to family members

Pre Immigration Succession Planning Tax Planning Family and Protection

Examples of Structures Italian Client UK Gov Law Trust White List Trustee Offshore Company Assets Italian Beneficiaries Protector Investment Advisor

Examples of Structures UK Trustee Swiss Trustee UK Trust Offshore Company Assets Italian Client Protector Investment Advisor Italian Beneficiaries

UK Non Dom Changes Assets in Own Name – New Rules Offshore Structures – New Rules

Assets in Own Name – New Rules £30K per annum –After 7 out of 9 years –Opt in and out –To pay or not to pay? –US citizens –Still cannot remit Must claim remittance basis Definition of remittance widened

Assets in Own Name – New Rules cont’d Source ceasing Alienation Lose personal allowances Rate of CGT 18% Entrepreneurs Relief Loss of Indexation Relief No Loss Relief Reporting

Offshore Structures – New Rules Reporting CGT Transparent – Beware UK Assets Remittance basis for capital payments Matching with past gains and capital payments since 1998/1981 Gains in offshore companies taxed twice? No Loss Relief Still IHT free