In August 2013, the Italian Parliament approved a new law that changes the rules with regard to fiscal monitoring of the investments and the assets held abroad by Italian residents.
The new law establishes that, alongside with the holder of foreign investments, also the beneficiary owner, as defined by the Italian anti-money laundering law (D.Lgs. 231/2007), is obliged to indicate in his income tax return such investments.
The law refers to “beneficial owners” as:
1.    If a Company:
–    Private individual (or individuals) who, ultimately, control an entity through the ownership or the direct or indirect control of the capital or of the votes relevant for the shareholders meeting. This rule does not apply in the case of a listed company under the control of the European Community law or to similar international standards.
The concept of control takes effect when the percentage is larger than 25% of the capital.
–    Private individual (or individuals) that in any case control the management of an entity.
2.    If a foundation or trust that manages and distributes funds:
–    If the future beneficiaries have been already determined, the private individual or the private individuals who are the beneficiaries of no less than 25% of an entity.
–    If the beneficiaries haven’t been established, the group of private individuals in the interest of which the entity has been incorporated;
–    The private individual or the private individuals who exercise their control over 25% or more of the assets of an entity.
The new law applies both to Italian resident trusts and to non-resident trusts.
Where the foreign investments and the foreign assets are held by an Italian resident trust, the new rules establish that:
1.    If the Italian resident beneficiaries benefits from less than 25% of the total assets of the trust, and for this reason they are not considered beneficial owners, trusts are obliged to indicate in their income tax return the amount of the investments and the assets held abroad.
2.    If the resident beneficiaries benefit from more than 25% of the assets and so they are the beneficiary owners as defined by the Italian law, the obligation to fill out the RW section of the income tax return falls upon those beneficiaries.
3.    If the beneficiaries of trusts are not determined, the obligation to fill out the RW section of the income tax return falls upon the trust.
With regard to non-resident trusts, the new law sets out that any Italian resident beneficiaries are always subject to fiscal monitoring regulations.
Specifically:
1.    If the resident beneficiary (or beneficiaries) benefits from less than 25% of the assets of the non-resident trust, without being considered beneficiary owner pursuant to Italian Law, they are obliged to indicate in the RW section of the income tax return the value of their portion of the trust assets.
2.    If the resident beneficiary (or resident beneficiaries) benefits from more than 25%, and so is considered beneficial owner of all the trust assets pursuant to the Italian Law, they are obliged to indicate in the RW section of the income tax return, both the total value of the foreign assets of the trust and the part of the assets attributable to them. In order to allow the beneficial owners resident in Italy to comply with the obligations indicated above, trustees of non-resident trusts must communicate to those beneficial owners all the information regarding the investments and the assets held abroad by the trust. This the only way for the beneficial owners to comply with their fiscal obligations.
Milan, 1st March 2014

New Rules for Fiscal Monitoring for Trusts.
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