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Today’s Top Headlines

Italy Introduces The First Derivative FTT

by Ulrika Lomas,, Brussels

04 September 2013

The Italian financial transaction tax (FTT), which began to be levied on March 1, 2013 on transactions in shares issued by Italian-resident companies, has, from September 1, become the first to be extended to financial derivatives.

The FTT is payable even if the derivative transaction is concluded outside of Italy and if both parties to the deal are also domiciled abroad, and is imposed over derivatives whose underlying assets are represented by measures or returns on Italian shares or on indices.

Therefore, dividend swaps, credit default swaps and index dividend futures are not subject to the tax. Nor are financial derivatives whose underlying assets are shares issued by Italian listed companies with an average market capitalization of less than EUR500m (USD660m).

The level of the tax on derivatives, of up to EUR200, depends on the type of instrument transacted and the value of the deal, and is reduced by one-fifth for transactions over regulated markets. A levy of 0.02 percent is also being charged on high-frequency trades lasting less than half a second.

The already-operational FTT on Italian company shares (or other equity instruments linked to those shares, no matter where they are issued), is currently imposed at 0.22 percent on the value of transactions on over-the-counter markets, reduced to 0.12 percent for such transactions on regular stock markets. The 0.22 percent rate will be reduced to 0.2 percent (and the 0.12 percent to 0.1 percent) in 2014.

TAGS: tax | investment | capital markets | equity investment | tobin tax | stock exchanges | tax rates | Italy | alternative investment | Expats

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