Italy: At last, some income tax rules for Trusts

Notwithstanding the ratification of the Hague Convention on Trusts back in 1989, Italy has enacted the first income tax rules applicable to trusts, effective from January 1 2007. A preliminary overview of law number 296, dated December 27 2006 (Law 296), is outlined below.
As a general rule, a trust is to be considered an autonomous taxpayer separate from the settlor, the trustee and the beneficiaries for 33% corporate income tax (IRES) and,where applicable, 4.25% local tax (IRAP) purposes. The above is particularly true for trusts that do not have identified beneficiaries. Indeed, such a trust would be subject to tax on its income pursuant to the applicable ordinary rules, depending on whether same trust would qualify as a resident commercial entity (where an entity whose exclusive or main purpose is to conduct a business activity); or a resident non commercial entity (where an entity whose exclusive or main purpose is not to conduct a business activity); or a non resident commercial entity or a non resident non commercial entity. Such trusts should also qualify as a "person subject to tax" for the purposes of (most of the) double tax treaties executed by Italy.(...)