By circular no. 4/E dated 6 March 2013 (the “Circular 4/E”), the Italian Revenue Agency (Agenzia delle Entrate) needfully clarified ambiguous aspects in relation to the tax regime of the project bond as provided for by Law Decree no. 83 of 22 June 2012 (the “Law Decree 83/2012”).
Article 1 of Law Decree 83/2012 amended the tax regime of notes and other debt securities (the “Project Bonds”) issued by the special purpose companies provided for by Article 157 of the Legislative Decree no. 163 of 12 April 2006 (the Italian “Code of Public Contracts”).
The above mentioned Article 157 of the Code of Public Contract, as amended by the Law Decree no. 1 of 24 January 2012, allows the project companies (joint stock or limited responsibility companies) to issue the Project Bonds that have been awarded a concession to create or to manage infrastructure projects or public services or that had entered into public-private partnership contracts.
Law Decree 83/2012 grants a favorable tax regime of the Project Bond providing for as follows:
– The withholding tax on the interest accrued will be same as that currently applicable to bonds issued by the Italian government; therefore, the interest paid to investors residing in Italy will be subject to withholding tax (imposta sostitutiva) of 12.5%, while interest paid to investors residing in countries with which Italy has an adequate exchange of information (the so called “white list countries”) will be exempt from any withholding and, therefore, no tax will be levied;
– The interest paid to the investors will be deductible by the issuers without the restrictions limiting deductions of interest arising from notes issued by companies that are not project companies; therefore, the interest paid by the issuer of the Project Bonds will be deductible similarly to interest paid on bank financing;
– With reference to indirect taxes – registration tax (imposta di registro), land registry tax (imposta catastale) and mortgage tax (imposta ipotecaria) – securities of any type, from any type of guarantor, given at any time in relation to the Project Bonds will be subject to a fixed stamp, mortgage and cadastral duty equal to Euro 168 for each. Law Decree 83/2012 provides that the favorable tax regime is applicable to the Project Bonds issued in the three years following the date of entry into force of the Law Decree 83/2012 (i.e. by 26 August 2012).
Until the adoption by the Revenue Agency of the Circular 4/E, some authors have interpreted the provisions of the Law Decree 83/2012 espousing that the above described favorable tax regime would apply only for a period of three years from the date of issuance of Project Bond and, therefore, after three years from the issuance (and regardless of its duration), the Project Bond would be subject to the “normal” tax regime generally provided for the notes.
Through the Circular 4/E, the Revenue Agency has finally clarified and confirmed that the favorable tax regime provided for by Law Decree 83/2012 applies to any Project Bond issued from 26 August 2012 to 26 August 2015 and for its entire duration.
Marco Cerritelli, LLM
Valentina Perrone
