Italy issues regulations on new register for beneficial owners of trusts

The Italian Government has published new guidance concerning a register of information on the beneficial owners of trusts. The register is not yet effective, but it is recommended that trustees start collecting the information they will need to list on the register and assess if they will potentially be subject to any reporting in the Italian register.

The public register is a further step in the implementation of the new EU Anti-Money Laundering provisions.

Who has to comply?

Italian and non-Italian trustees of:

• trusts producing ‘legal effects relevant for tax purposes’ according to Art. 73 of the Italian Income Tax Code, namely Italian tax resident trusts and non-Italian tax resident trusts deriving Italian sourced income;
• arrangements comparable to trusts established or tax resident in Italy;

All trustees in these categories must report the specified information on beneficial owners (‘Beneficial Owners Information’) to a special section of the Company Register of the Chamber of Commerce territorially competent (the ‘Register’).

In the light of the above, an initial important step for foreign trustees will be to evaluate and/or update any past assessments about the foreign tax residence effectiveness of their trusts with Italian connections to check if they might fall within the abovementioned categories.

Who are the beneficial owners of trusts and similar arrangements?

Beneficial owners of trust and similar arrangements shall be cumulatively identified in:

• The settlor(s);
• The trustee(s);
• The protector(s) or other individual(s) on behalf of the trustee(s) (if any);
• The beneficiary(ies) or the class of beneficiaries;
• Other individuals exercising control over the trust or the similar arrangement;
• Other individuals ultimately exercising control over the trust or similar arrangement assets by means of direct or indirect ownership or by other means.

Also in this case, the broad terms used in the law will result in supplemental arguments to use a broad definition of “beneficial owners” of foreign trusts for domestic reporting obligations in the foreign asset reporting form (“RW Form”). Thus, it is advisable to carry out in-depth analysis to verify whether the Italian tax resident beneficiaries of the trust are fully compliant under Italian reporting obligations in the RW Form.

What information must be reported?

The following Beneficial Owners Information will have to be reported:

• Name and surname of each beneficial owner;
• Place and date of birth of each beneficial owner;
• Place of residence and domicile of each beneficial owner;
• Tax code of each beneficial owner (if any);
• Citizenship of each beneficial owner.

Moreover, the following additional information will have to be reported:

• Tax code of the trust (or comparable arrangement);
• Name of the trust (or comparable arrangement);
• Date, place and registration details of the establishment deed of the trust (or comparable arrangement);
• Exceptional circumstances that may exclude the access to the Beneficial Owners Information;
• Registered email address for the trustee to receive communications in case of exceptional circumstance that may exclude the access (see below).

Based on the current version of the Decree, the Trustees would be subject to a substantial amount of work to collect all the aforementioned information in relation to all beneficial owners of their trusts (especially where the trust deed provides for a very broad definition of beneficiaries).We hope that the Italian legislator will reduce the level of information to be disclosed.

Who can access the Beneficial Owners Information?

The Beneficial Owners Information may be accessed by:

• Selected Italian public authorities without any limitation;
• Italian judicial authorities, in accordance with their institutional powers;
• Italian authorities in charge of combatting tax evasion, pursuant to strict specific modalities yet to be implemented;
• Individuals subject to Know-Your-Customer (KYC) obligations, upon accreditation and payment of administration fees;
• Upon specific conditions, private parties holding a significant, interest may request to have access to the beneficial owners information. In such a case, adequate evidence will need to be provided, to support the existence of the above-mentioned requirements

In exceptional circumstances, the access to Beneficial Owners Information may be excluded (in whole or in part) if it would expose the beneficial owner to a disproportionate risk.

When will reporting have to be made?

For existing trusts and similar arrangements the first submission of Beneficial Owners Information to the Register will have to be carried out within 60 days of the launch of the register, which will be announced by the Italian Ministry of Economic Development in the Official Gazette.

After the first report, any changes in the Beneficial Owners Information will have to be reported within 30 days from the event that gives rise to the change.

Beneficial Owners Information will have to be confirmed on an annual basis within 12 months from the first reporting or the latest change or confirmation of information.

For newly established trusts and similar arrangements Beneficial Owners Information should be reported to the Register within 30 days of the establishment of the trust.

How will reporting be done?

Beneficial Ownership Information will be reported to the Register electronically, with specific forms which have not yet been published.

Do any penalties apply for missed reports?

Failure to report beneficial ownership information will result in an administrative penalty ranging from Euro 103 to Euro 1,032. If reporting is made within 30 days of the relevant deadline, the penalty will be reduced to one third (ranging from Euro 34 to Euro 344).

Fraudulent reporting may qualify as a criminal offence.