Italian Court Rules On Capital Gains Tax

by Ulrika Lomas, Tax-News.com, Brussels

13 August 2001

An Italian court has ruled that the current method for taxing capital gains on financial investments is to be suspended because it penalizes investors by levying a tax regardless of whether or not they make a profit. The case was brought by the Italian consumer group, Codacons, which went to court on behalf of investors with the argument that they were obliged to pay a 12.5 per cent tax on capital gains between the date of purchase and the last day of each year.

Describing the tax as a 'virtual gains', Codacons claimed that many investors paid taxes on assets that declined in value after the tax was paid and were forced to sell the holdings after their value dropped below the original price paid in the following year.

According to Italian newspaper, Il Sole, Industry Minister, Antonio Marzano, has declared that a new law which eliminates the 'virtual' capital gains tax should be introduced, and the Economy Minister, Giulio Tremonti, has pledged to reform the country's tax regime over the next five years.

Guido Cammarano, chief of Italian fund managers association, Assogestioni, has told the newspaper that the court's decision to suspend the tax law 'could be the first step toward a very positive solution.'

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