Financial intermediaries and holding companies: clarification from the Revenue Agency

| Insights

Following the implementation of ATAD Directive and new Article 162 bis of Italian Income tax code, the terms “financial intermediary” and “holding company” have been made clear. The mentioned article classifies the subjects that carry out a financial activity into four categories:

  1. Financial intermediaries;
  2. Financial holding companies, also qualified as financial intermediaries;
  3. Non-financial holding companies;
  4. Subjects similar to non-financial holding companies (i.e those that carry out financial activities but not towards the public).

The article sets unique criteria to identify if a company can be considered a financial holding company or non-financial holding company: The requirement exists when “basing on the last approved company balance sheet data, the amount of participation hold by the company in these financial intermediaries or the total amount of assets relate to these entities is greater than 50% of the total assets”.

Although the article made clear the criteria to determine the ” financial holding entity”, there are still some doubts about its application, given that there may be companies managing a portfolio of financial instruments or securities.

The answer to this additional doubt was provided by the Inland Revenue ( no.121 of 24 April 2020) to a question submitted by a company, a micro-enterprise, which prepares its financial statements in a simplified form, which does not hold participation but, a portfolio of securities that fall within the category of “exchange trade commodities”.

According to the Inland Revenue, that company cannot be classified among those listed in Article 162 bis of Italian Tax Code, because it does not hold any equity interests and so cannot be considered as a “holding company”. This company will calculate its taxable income for IRES purposes and IRAP purposes according to the ordinary rules.

It should be noted that holding companies, taking into account their nature (financial and non-financial), their activity and the relationships they have with other parties, may be subject to various disclosure obligations:

  • Monthly communication Tax registry – archive of financial relations (art. 7 paragraph 6 DPR 605/1973);
  • Annual supplementary communication to the financial relations archive (art.11 paragraph 2 of Decree-Law 201/2011);
  • Financial investigations, in which case the company must communicate its Certified electronic mail for the REI (Register of electronic mail) in order to respond to requests for investigation by the Authority.

In the answer no.121 of 24 April 2020, the Italian Inland revenue clarified that the company, according to MIFID Directive provisions, can be considered as “financial operator” and must communicate its Certified electronic mail for REI in order to give information in case of investigation of authorities, but it will not be required to make annual or monthly disclosure, since it does not have financial relationships with third parties.