On Friday, November 15, the Italian Tax Agency (“ITA”) issued a tax ruling aimed at answering a question submitted by a taxpayer, an Italian representative of a VAT Group.

Provided that Italy introduced VAT Grouping effective from 1 January 2018, where related norms were introduced under art.70 bis onwards of Presidential Decree 633/1972 (the “VAt Law”) and the VAT representative is indeed the entity which represents the whole VAT Group, the issue at stake is to which extent, if any, segregated and/or non segregated assets of an Italian securitisation vehicle may be held liable under art. 70 octies, par.2, of VAT Law.

The rule set forth by art.70 octies is that there is always a joint liability between the VAT representative and the other members of the VAT Group in respect of the tax, interest and penalties arising from assessments and liquidation activities.

Taxpayer expectation indicated that, since according to art. 3, par.2 of Law 30 April 1999 n.130, the Italian Securitisation Law, segregated assets held by securitisation vehicles cannot be seized by any creditor different from bondholders and the claims held in segregation have to be used exclusively to finance the acquisition of such credits together with the costs related to the operation, joint liabilities under art.70 octies should refer only to the non-segregated assets of the securitisation vehicle.

The ITA response

ITA response was not in line with the taxpayer expectations. The Agency stated in fact that under art.70 octies joint liability may be related also to the segregated assets only in respect of the tax (VAT), interest and penalties referred to the management of such segregated assets.

The reasoning of ITA was based on the fact that art.3, sec. 2 of the Italian Securitisation Law makes also reference to covering the costs of the operation, thus identifying the costs of the securitisation also with potential VAT liabilities.

Our comments

The ruling is not convincing because it  seems in disagreement with Italian commercial and tax law.

First of all, art.3, sec.2 of the Italian securitisation law makes reference to the costs of the operation, meaning the operation of securitisation.  ITA response, on the other hand, makes reference to a VAT liability referred to the management of the assets (“..ascrivibili alla gestione dei patrimoni..). The two concepts, the operation of securitisation and the management of the assets, are different.

Secondly, the letter of art 3, Sec. 2 of Law 130/99 states that segregated assets are exclusively aimed at protecting bondholders and no other creditor. The Fisc would be a third party creditor, totally unrelated from the bondholders. Exclusive protection of the bondholders is also the rationale by which the securitisation vehicle is a bankrupcy remote entity, which strengthens the idea of “exclusivity”.

As regards the tax law side, the legal basis of the position of ITA is art.70 octies of VAT Law, which refers to members of a VAT Group: the case at hand refers in fact to a securitisation vehicle part of a VAT Group.

This being the case and the legal background, the position of ITA would lead to think that segregated assets are potentially at risk only in the case when the vehicle is part of a VAT Group. According to such interpretation, if the vehicle were not part of a VAT Group, 70 octies would not be applicable and no issue would arise.

The interpretation illustrated above, further than apparently indicating an easy way out of VAT tax risks for securitisation vehicles,  does dot seem compliant with Italian constitutional principles of equality and non discrimination set forth by art. 3 of our Constitution.

If segregated assets were considered to be potentially liable as a consequence of a breach of VAT law, there should be no difference between a securitisation vehicle within VAT consolidation or in a stand-alone position.

Finally, one more critical profile should be raised.

Specific provisions on tax liabilities of management companies of real estate investment funds, which are legally a form of segregated assets, are dealt with at sec. 4 of art.70 duodecies of VAT Law. However, both from a commercial law and from a regulatory perspective, real estate investment funds and segregated assets of securitisation vehicles deeply differ one from the other, so that rules applicable to real estate investment funds cannot automatically be extended to securitisation vehicles.

This interpretation seems also confirmed by the the circumstance that, as also mentioned in the ruling, ITA Circular n.19/E of 31 October 2018 about VAt Group rules mentions only real estate investment funds and not securitisation vehicles. In our view, it seems clear that such Circular did not intend to provide the same or a similar interpretation for both entities but only for real estate investment funds.


Our personal view is in line with the taxpayer expectation, that is, according to current legislation, any VAT liability should never hit the  segregated assets of securitisation vehicles, both in the case they are part of a VAt Group and in the case they are in a stand-alone position.

In order to introduce a different rule, a legislative change should take place probably in order to reduce the scope of the “exclusivity rule” of Italian securitisation law.

As long as segregated assets are “exclusively aimed” at protection of bondholders, it does not seem possible to introduce exceptions simply by interpretation.

In the end, however, it should be underlined that eventual law changes would be in contrast with recent 2019 legislation (“Growth Decree” of last April) which extended the concept  of segregated assets to real estate owned companies (so called Reocos) linked to securitisation operations.

Making steps in one direction and, all of a sudden, making steps in the opposite direction, does not increase confidence of investors.

That is why full clarity on securitisation operations tax profiles would of course be welcome.

If further information is required, please refer to your LED Taxand contact:

DISCLAIMER: The information contained in this newsletter cannot be considered as a legal opinion. LED Taxand does not accept any liability in connection with the use of such publication without the collaboration of its professionals.
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