Italy makes taxpayer-favorable modifications to treatment of corporate bonds issued by non-publicly-traded companies
Following recent amendments to the Italian tax treatment of bonds issued by corporations that do not issue publicly traded financial instruments, those bonds now are more appealing for both Italian issuers and non-Italian investors. For Italian issuers, the recent amendments repeal the specific limitation on interest deductibility based on the interest rate. Subject to certain conditions, qualified non-Italian investors may receive an exemption from Italian withholding tax.
In addition, taxpayers should evaluate the possibility of using a new instrument (profit participating bonds and/or subordinated bonds) in light of expected administrative guidance.