ETF Taxation in Italy
There are three main ways of applying taxation to your investment:
- Through the declarative system (Regime Dichiarativo). This is done by an investor on an annual basis through a tax return.
- Using the administered system (Regime del Risparmio Amministrato). Here, the tax declaration is performed by a broker at the sale of the ETF or the release of dividends.
- Using the managed system (Regime del Risparmio Amministrato). In this case, the tax is declared by an authorized intermediary, such as a tax accountant at the end of the year.
In the case of holding ETFs through resident financial intermediaries, investors can choose whether to apply the administered savings regime or the declarative regime. Meanwhile, when operating with a non-resident financial intermediary, investors can only utilize the declarative regime.
Capital gains tax
Capital gains are taxable for accumulating and distributing ETFs. For accumulating ETFs, capital gains tax is paid upon the sale of the ETF.
A differentiation is made between harmonized ETFs (those compliant with European directives and therefore listed on European stock exchanges) and non-harmonized ETFs (which are not compliant with European directives and are listed on other markets). Currently, Mintos offers only harmonized ETFs.
Capital gains from the sale of harmonized ETFs are subject to substitute tax (imposta sostitutiva) at a flat rate of 26%. Investing in bond ETFs is tax advantageous in Italy, government bonds in EUR are taxed lower than any other type of asset, at 12.5%. A lower rate applies to all countries stated in a whitelist which the Italian Revenue Agency maintains. For example, in the case of an ETF composed of 50% of whitelisted countries’ government securities and the remaining 50% of stocks, the income obtained will be taxed half at 12.5% and half at 26%.
In the case of non-harmonized ETFs (ETFs other than those subject to EU supervision - for example, ETFs from the US), capital gains are subject to ordinary IRPEF taxation. This means that they are added to all other income (self-employment, employment, rentals, etc.) and therefore taxed according to the applicable bracket. So the taxation regime for non-harmonized ETFs is withholding tax at a rate of 26% and ordinary IRPEF taxation.
Please note, that detailed information regarding the type of ETFs included within your portfolio can be found on your ETF Portfolio Overview page.
Capital gains are most commonly calculated as the difference between the sale price and the purchase price of the ETF shares, adjusted for any applicable costs. If losses occur upon the sale of ETFs, they can be offset by the gains generated from other financial instruments generating accrued income.
See the example below:
Capital gain tax
ETF purchase amount: €10 000
Portfolio distribution: 30% whitelisted countries’ government bonds & 70% stocks
ETF sale amount: €13 000
Gain on sale = €13 000 - €10 000 = €3000
Capital gains tax on government bonds = €3000 * 30% * 12.5% = €112.50
Capital gains tax on stocks = €3000 * 70% * 26% = €546
Capital gains tax total = €112.50 + €546.00= €658.50
Mintos does not provide tax advice. For specifics on local tax regulations, we recommend you obtain advice from the Tax Authorities or independent advice from tax consultants.