In its Reply n. 5/2024, the Italian Revenue Agency further elaborates the rules of tax treatment to be applied on benefits provided by two foreign (British) supplementary pension funds.
The reply outlines, albeit indirectly, the specific features which identify the welfare nature of the aforementioned British pension funds, assimilating them with the Italian pension schemes.
The applicable tax regime
In the case under consideration, a special relevance is given to the following features:
- Both pension funds qualify as supplementary pension plan under UK rules and laws;
- Participants (taxpayers) are entitled to receive the cumulative sums of the fund only upon reaching the retirement age and after having terminated their employment with the employer.
However, the relevant benefits, both in the form of a yearly income and of a lump sum, do not enjoy the favourable tax regime envisaged by Art 11, Leg. Decree 252/2005 (reduced income tax between 9% and 15%).
The Revenue Agency underlines that, as per Art 15-ter of the above Decree, the favourable tax regime can be applied to benefits paid by EU-based pension funds, as per EU Directive 2016/2341, only when:
- The concerned Pension funds are allowed by the relevant control authority of their home country to perform cross-border activities;
- This applies only to pension fund’s membership joined in the territory of the Italian Republic and to the resources accumulated and managed in connection with such membership.
As a result, all benefits paid as yearly income by European pension funds which do not perform cross border activites (albeit complying with the EU Directive), those paid by “paneuropean” funds which do not originate from memberships collected in Italy and those paid by non-European pension funds are subject to taxation as per Art 49, sub 2/A, Leg. Decree 917/1986 (i.e: progressive income tax). If benefits are paid in the form of lump sum, they are subject to the so-called separate taxation, as per Art 17, sub 1/A of the same Decree.
Finally, the Tax Revenue confirms that IVAFE (wealth tax) does not apply on the global value of the pension fund held by the taxpayer. At the same time, income ditributed and/or capital gains arising from the management of assets held in such British pension funds are not considered taxable income for the taxpayer.