Due to the Ruling n.291 delivered by Italian Tax Agency on August 31st, we are able to reply to the question “How are perpetual bond taxed”?
Ruling n.291 addresses the tax qualification of perpetual bonds issued by Italian listed companies.
The matter is of extreme interest to both Italian issuers and foreign qualified investors. Under IFRS accounting principles perpetual bonds are qualified as equity or quasi-equity, while, under tax rules, the Agency confirms that it is debt, thus confirming many already existing current market interpretations. Furthermore, Ruling n.291 addresses the matter with such a deep technical analysis that it can be considered a sort of general guideline for setting the borders between equity and debt with reference to complex financial instruments. Patrizio Braccioni from LED Taxand offers more insights.