Italy: New Reporting Obligations For Trusts In Italy

What professional trustees and beneficiaries need to consider

Non-resident trusts under increased scrutiny

Italy was the first civil law country to ratify the Hague Trust Convention. This was followed by the introduction of express rules dealing with the tax treatment of trusts in 2007.

Overall, the statutory rules (coupled with low gift and succession taxes) are relatively benign and it has been possible to use trusts to defer income and capital gains tax by holding assets through non-Italian resident trusts (broadly, discretionary and irrevocable trusts that (a) are effectively managed abroad, (b) are not comprised mainly of Italian situate assets and (c) are not established in a blacklisted jurisdiction).

However, at the end of 2010 the Italian tax authorities released a circular letter in which they outlined a number of scenarios in which they would effectively disregard trusts (by treating them as 'fictitious interpositions'). This approach has been widely criticised by commentators as being too broad-brushed.

New tax reporting obligations

In the latest instalment in what seems to be an increasingly hostile saga for trusts, the Italian government has effectively extended the existing reporting obligations (under which Italian taxpayers must disclose any non-Italian assets they own, whether income-producing or not) to trust beneficiaries.

Strictly, the new rules (which entered into force on 4 September 2013) apply to 'beneficial owners' of offshore structures. However, the term is defined by reference to the anti-money laundering rules, which contain a wide definition of 'beneficial owner' – much wider than its tax law counterpart, because of the different scope of the relevant rules (the aim of any anti-money laundering legislation is to identify any person who is behind a legal structure, regardless of their power to enjoy its income, which is what tax laws generally seek to tax).

Going forward, the new reporting-cum-anti-money laundering rules will apply to the following scenarios: '1) if the future beneficiaries have already been determined, the beneficiaries of 25% or more of the assets; 2) if the beneficiaries have not yet been determined, the class of persons in whose main interest the [trust] has been established/acts; 3) the person(s) who exercise control in respect of 25% or more of the [trust] assets'.

Offshore trustees1and Italian resident beneficiaries need to consider the terms of their trusts and decide whether it falls within the definition outlined above.

If it does, then the trustee and/or the beneficiaries will have to disclose the existence of the trust in their tax return, which will increase the potential for tax litigation.

Regulatory disclosure of shareholdings in listed companies

In a separate move, the Italian Securities and Exchange Commission (CONSOB) issued new rules requiring trustees to disclose the identity of the settlor/beneficiaries and of any protector, as well as the nature and duration of a trust which holds 2% or more of the ordinary shares in a listed Italian company, or is a party to a shareholders' agreement in relation to such a company. Failure to comply with the new rules may lead to a fine between €5,000 and €500,000 (if the disclosure takes place no later than two months after the event) and between €25,000 and €2,500,000 (if more than two months late).

Should non-resident trusts migrate to Italy?

The answer to this question is not straightforward, as it raises a number of complex issues.

Possibly not such a bad idea...

In Italy, trusts are treated as akin to companies for tax purposes. This may lead to some interesting results. For example, dividends received by Italian resident trustees may benefit from participation exemption. In addition, the Italian tax authorities consider that income taxed in the hands of trustees should not be taxed again in the hands of the beneficiaries. Add to this the fact that, in Italy, gift tax is levied as very low rates (between 4% and 8%) and trusts look like the perfect holding vehicle. Furthermore, trustees may keep their affairs confidential by holding assets through a qualified intermediary (e.g. a bank or nominee) who acts as tax collection agent (so that income may not need to be reported when tax is levied at source).

By bringing a foreign trust onshore, trustees and beneficiaries may also avoid the reporting obligations mentioned above.

Tax planning – don't let the tail wag the dog

Over the next few months, many foreign trustees will feel the pressure to migrate their trusts to Italy, e.g. by appointing an Italian co-trustee or by resigning in favour of an Italian trustee.

In our professional practice, we saw a similar wave at the time of the last tax amnesty programme.

However, the problem of tax planning is that, well, it only deals with tax. Instead, professional trustees should consider the trust law implications of migrating common law trusts to Italy. Whilst the Italian courts have some experience with trusts and Italian practitioners have generally a good grasp of trust law issues, trustees should consider that (unlike neighbouring Switzerland) Italy has stopped short from introducing express conflict of laws rules dealing with trusts. Thus, by migrating trusts to Italy, foreign trustees may find it more difficult to have disputes resolved by the courts of the country the proper law of which governs the trust.  Therefore, trustees need to consider jurisdictional issues as well as the interaction between the proper law of the trust and local issues (such as Italy's rules on forced heirship, divorce and the protection of creditors).

With over 40 Italian speaking lawyers, the biggest private client and contentious trust teams in Europe and offices both in the UK as well as Italy (in addition to our other locations), we have an unparalleled expertise in dealing with complex trust structures with an Italian component, whether in connection with tax, fiduciary or contentious matters. Our cross-border expertise means that we can advise trustees and beneficiaries alike in their own language, both technically and culturally.


1.Under a rebuttable statutory presumption, a trust is deemed to be resident in Italy for tax purposes if it is not established in a white-listed jurisdiction and either: (a) at least one of the settlors and one of the beneficiaries are resident in Italy; or (b) Italian real estate is added to such a trust.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions