Viewed that the interests related to the loan disbursed by a Dutch Bank to an Italian enterprise fall within the exemption regime - article 26(5-bis) of Decree 600/73 - and that the same Bank continues to be the only "receiver" of the entire interest quota accrued by the Italian company, although part of it is retroceded to an Irish securitization company, it is however considered that the resident debtor may continue to pay such proceeds without applying the withholding tax as referred to Article 26 (5-bis) of the Presidential Decree 600/73. In this case, the legal reasons behind the non-application of the withholding tax on direct lending operations are clarified and illustrated by the Revenue Agency trough an ad hoc ruling, or interpello 423, published recently in reply to the demand posed by a Dutch Bank.
The pending fiscal demand Particularly, the question concerns the need to investigate the securitization company (and its partners), with which the bank in 2018 concluded a sub-participation agreement for part of the loan, in order to continue disapply the withholding and therefore maintain the full exemption according to a look through approach, considering that new Irish partner could be identified as an effective beneficiary and being moreover an «institutional investor». As such, therefore, a subject that could well benefit from the exemption.
The interests recipient make the difference The Revenue response is affirmative but follows a different path, shorter and already experienced in the past. In fact, after having reaffirmed the logic of the Italian regulatory and tax framework adopted to allow direct lending, introduced by Decree Law 91/14 to favor the access of Italian companies to direct credit also by foreign operators (credit institutions, insurance companies and foreign institutional investors) and further revised by Legislative Decree 18/16, with the aim of equating national and foreign operators from a regulatory standpoint in terms of authorization to operate, so as to avoid loss of competitiveness for Italian entities, the Agency explains the salient aspects of the provision. Thus foreign institutional investors can enjoy the exemption regime if they satisfy the following conditions: first of all, under the original wording of article 26(5-bis) of Decree 600/73, as enacted by Decree 91/2014, the withholding tax exemption was available in respect of interest and other proceeds derived from medium-to long-term loans granted to enterprises by (i) credit institutions established in an EU Member State, (ii) insurance companies established and authorized under the laws of an EU Member State and (iii) and by such entities established in a white-listed State that is part of the EEA. Later, article 26(5-bis) was amended by Decree 3 of 24 January 2015 (Decree 3/2015), which broadened the scope of application of the withholding tax exemption, making it available to a larger number of foreign lenders. Therefore, in this case, the loan was disbursed in 2016 by the Dutch Bank, which is one of the parties to whom the law in question - without prejudice to all other requirements - guarantees the non-application of the withholding tax on the interests of the financed Italian company and in fact this regime was applied. Essentially, in essence, despite having signed a contract with an Irish entity to share part of the interests received by the Italian company, ultimately the Dutch Bank continues to be the sole recipient of the entire interest portion paid by the Italian counterpart.
Stefano Latini