Taxation of loans and fringe benefits

The Italian Revenue Agency, in response to inquiry number 378/2023, has clarified that loans granted to employees and subsequently securitized in special-purpose vehicles (SPVs) must be taxed in accordance with the provisions outlined in letter b), paragraph 4, Article 51 of the Italian Consolidated Income Tax Act (TUIR).

This provision stipulates that, for the purpose of determining the taxable income of employees in cases of loan grants, 50% of the difference between the interest amount calculated at the current applicable tax reference rate (TUR) at the end of each year and the interest amount calculated at the rate applied should be considered as taxable income.

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Taxation of loans

When does this rule apply?

  1. To all forms of financing provided by the employer, regardless of their duration and the currency used.
  2. To loans granted by third parties with whom the employer has entered into agreements or conventions, even in the absence of specific obligations on the part of the employer.
  3. To loans granted in the form of overdraft facilities, mortgage loans, and salary assignments.

Excluded from this rule are installment payments provided for goods sold or services rendered by the employer.

In the response to the aforementioned inquiry, the Italian Revenue Agency has emphasized that Law No. 130/1999, which introduced regulations pertaining to securitization of credits, does not affect the rules set forth in letter b), paragraph 4, Article 51 of the TUIR.

To delve into further detail: securitization operations involve the sale of credits to a special-purpose vehicle (SPV), which finances itself by issuing bonds to pay for the acquisition. The Italian Revenue Agency has clarified that, with regard to the subsidized interest rate mortgage contract in question, the conditions stipulated in letter b), paragraph 4, Article 51 of the TUIR are met, irrespective of the securitization operation. Consequently, 50% of the difference between the interest amount calculated at the current applicable tax reference rate (TUR) at the end of each year and the interest amount calculated at the rate specified in the mortgage contract will constitute taxable employment income.

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