Italian tax Central Authority issues a discussion draft on the taxation of trusts

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The Italian Tax Authority has recently issued a draft Circular letter regarding the taxation of trusts. The draft has been published for public consultation until the 30th of September 2021, it is therefore likely that its content may change significantly. Nonetheless, given the importance of such publishment, a brief comment seems necessary.

This document consists of the first comprehensive and official position of the Italian Tax Authority after the major reform of the taxation of trusts occurred in 2019 with the Law Decree n. 124/2019. The major focus is on the income tax regime of trusts, with special regard to the distribution of non-resident trust to Italian tax resident beneficiaries. Furthermore, the draft embraces recent Supreme Court rulings regarding indirect taxation of trusts, clarifies further issues on ‘fiscal monitoring’ and the application of IVIE and IVAFE to trusts.

A brief but comprehensive analysis of the document can be found in the attached circular.