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Italy Reforms Tax Rules On 'Carried Interest'

by Ulrika Lomas, Tax-News.com, Brussels

28 June 2017


Italy has cut the tax burden on performance-based payments received by investment fund managers and payments to such entities' limited partners.

The change concerns "carried interest" – payments that are typically received by fund managers as part of their compensation package, directly linked to the performance of the investments they oversee, and by stakeholders. Carried interest was previously taxed as income from the provision of personal services, subject to tax at rates of up to 43 percent.

Under Law Decree No. 50 of 2017, which became effective from June 23, such carried interest will instead be taxable as investment income, which, subject to a number of conditions, would be subject to tax at 26 percent. This is expected to considerably boost Italy's appeal as a financial center ahead of Brexit.

TAGS: capital gains tax (CGT) | tax | investment | private equity | self-employment | legislation | withholding tax | Italy | individual income tax

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