Among the several measures provided for by Budget Law for financial year 2021 (Law No. 178/2020), Italian Government seems to have put an end to the issue relating to the tax on transfers of money to abroad executed through payment institutions governed by Art. 114-decies of Legislative Decree No. 385 of 1 September 1993 (the "Tax"), by expressly repealing the Tax at Art. 1, para. 1120.
The Tax was introduced by Art. 25-novies of Law Decree No. 119 of 23 October 2018 – so called Tax Decree – and provided for a 1.5% tax on each money transfer exceeding EUR 10 towards non-EU countries (excluding commercial transactions) executed by payment institutions carrying out the money remittance service (i.e. a payment service where, without the need for the payer or the payee to open a payment account, the payment service provider receives funds from the payer for the sole purpose of transferring a corresponding amount, expressed in legal tender, to the payee or to another payment service provider acting on behalf of the payee, and/or where such funds are received on behalf of the payee and made available to the latter).
Immediately following its entry into force, the Tax had raised numerous queries; the main issues were related to its discriminatory nature, since the Tax was only applicable to transactions executed by payment institutions (and not also to money transfer transactions executed by other payment services providers) and to the fact that the Tax appeared in breach of the Community principle of free movement of capital, set out by Art. 63 of the Treaty on the Functioning of the European Union, preventing any restriction on the movement of capital between Member States, as well as between Member States and third countries. In light of the critical issues highlighted, the implementing rules referred to in Art. 25-novies of the Tax Decree have never been issued.
Hogan Lovells Financial Services and Tax teams are available for any clarification and advice.
Authored by Jeffrey Greenbaum, Serena Pietrosanti, Claudia Colomba, Maria Cristina Conte, and Elisabetta Zeppieri