In its recently published reply to Ruling n. 65/2024, the Revenue Agency has dealt with the case of two spouses, whose bonds, issued by a Dutch bank and its holding company, had been expropriated.
The taxpayers’ case
Due to the major crisis of issuing financial institutions, with an imminent danger for the stability of the Dutch financial system, the Dutch government had decided to forcibly withdraw the bonds held by the public, granting compensation to holders.
In exchange for the bonds, the applicant taxpayers received a sum of money, which was lower than both the nominal value and the purchase price of the bonds.
However, no withholding tax or tax has been applied to this sum, since it is not considered taxable in the Netherlands.
The applicants’ question regards the taxability in Italy of the compension received.
The Revenue Agency’s reply
To respond to this question, after having noted that the expropriation of bonds is not provided for by Italian law, the Agency has recalled the general principles of income taxation.
According to these principles, which is to say art. 6, par. 2 of TUIR, income obtained in substitution of other income, including those deriving from the assignment of credits, and the compensation for damages consisting in the loss of income (with the exception of those related to permanent disability or death) are considered income of the same category as those substituted or lost. Default interest and interest for deferred payment fall within the same category of income from which the credits on which interests are accrued derive.
In general, when the indemnity compensates in a supplementary or substitutive manner for the failure to receive income or revenues (known as “lucro cessante”, loss of profit), the sums paid must be included in the total income of the beneficiary and must be subject to taxation.
However, if the compensation is issued to indemnify losses effectively incurred or to compensate for the economic loss (known as “danno emergente”, emerging damage), the sums paid are not subject to taxation. In this case, indeed, the tax assumption is missing, since the compensation does not represent a form of income.
To strengthen its conclusions, the Agency recalls different resolutions, among which is the reply to ruling n. 112/2020, related to compensation issued by banks with the sole purpose of reintegrating the economic losses incurred by investors. This resolution reaches the same conclusions, recognising the compensation as not taxable for direct tax purposes, since it is issued for the sole reintegration of an emerging damage.