FOR ITALIAN TAX AUTHORITY THE CARRIED INTEREST PROFIT HAS TO BE ANALYZED CASE BY CASE

In the private equity field, the carried interest is a particular remuneration to be conferred to management and/ or employees of companies, or to companies that manage funds, that are owners of financial resources with patrimonial rights expansive. In particular, these beneficiaries have the right to obtain a proportional part of the incomes of investment.

Italian Tax Authority, with recent ruling no. 435 and no. 436, reminded that the lack of one or more conditions stated by the law (article 60of the Decree Law no. 50/2017), does not entail that carried interest may be qualified as a employees or self-employment income. It is necessary to carry out a careful case-by-case analysi, aimed at verifying if the carried interest, even not corresponding to the mentioned conditions, may be qualified as financial investment.

For example, it may be a financial disposition sign: (i) the suitability of the investment to guarantee a weighing the interests between investors/shareholders and management, (ii) maintenance by the management of the financial resource’s ownership even in the event of termination of the employment relationship.

These rulings confirm the position of the Tax Authority already expressed last year with Law Principle no. 3 and Circular 25/E of 16 October 2017.

Our staff is available for any clarification.