Italian financial institutions are required to disclose information relating to “Reportable” accounts identified as such in application of the Italian regulations implementing international agreements on the exchange of financial information for tax purposes according to the Common Reporting Standard (“CRS”) and of the Council Directive 2014/107/EU of December 9th 2014 amending Directive 2011/16/EU concerning the mandatory automatic exchange of information in the tax field.

CRS communications are mandatory when the reporting subject and the reported persons are resident in different States.

In the case of a Trust, the first essential assessment is therefore to verify the residence. For the sole purposes of CRS communications, for Trusts, Foundations and similar entities, the principle that the residence of the entity coincides with the residence of the Trustee or Trustees applies. If there are more Trustees in different States, they will have to send more CRS communications to their Administration which will send the data to the Italian Tax Authority – “Agenzia delle Entrate”. In this case, a critical issue could arise: the Italian Tax Authority would recceive multiple CRS communications for the same subjects, which should coincide if the due diligence drawn up by the Trustees had been carried out correctly.

This basic principle finds a specific exception in the event that the Trust is considered an autonomous taxable person in a particular State. A distinction must be made between blind and transparent Trusts. In general, all blind Trusts, in the various jurisdictions, are considered independent tax subjects. Therefore, in this case, for the purposes of CRS communications, the residence to be considered is that of the Trust itself and not of the Trustee, as an autonomous taxable person for tax purposes, also following the provisions dictated by the national legislation referred to in art. 73 of the TUIR.

Example: a blind UK Trust, with an English Trustee, if it is considered resident for tax purposes in Italy, also following the presumptions dictated by art. 73 of the TUIR, must not report the positions of the Italian beneficiaries, as there is a coincidence between the State of residence of the Trust (ITA) and the State of residence of the beneficiaries (ITA).

It should be noted that there is no CRS communication obligation in the case of a non-professional Trustee.

Studio STS is available with its professionals for consultancy and support, as well as for any in-depth study and evaluation.