Taxation

The tax regulations According to the regulatory provisions contained in articles 43 and 44 of Law No. 205 of December 27, 2017 (2018 Budget Law), peer-to-peer lending platforms that qualify as financial intermediaries (registered in the register pursuant to article 106 of the TUB) or as payment institutions (pursuant to article 114 of the TUB - Consolidated Banking Act), authorized by the Bank of Italy, act as withholding agents by applying a final withholding tax at a rate of 26% on income derived from loans granted to non-professional lenders (individuals) through the same platforms. In this case, the investor (customer of the platform) has no obligation towards the tax authorities, neither in terms of declaration nor in terms of payment.

Response from the Italian Revenue Agency The Italian Revenue Agency recently expressed its opinion with Response No. 168/E of 2020 regarding the specific case of those companies that operate as online peer-to-peer lending platform managers, acting as agents of a payment institution, but do not qualify as financial intermediaries registered in the register pursuant to article 106 of the TUB, nor as payment institutions pursuant to article 114 of the TUB, authorized by the Bank of Italy. As this type of platform does not fall within the scope of the new letter d-bis) of article 44 of the TUIR, the tax administration has responded that they CANNOT act as withholding agents or apply the withholding tax at a rate of 26% on the interest paid through the platform itself in relation to P2P lending financing.

And REVESTO? REVESTO operates as a payment agent of a payment institution whose operations are recognized by the Bank of Italy: the French payment institution Lemonway SaS.

Therefore, the income derived from Crowdfunding Lending activities, received through REVESTO, is considered as "capital income" and will therefore contribute to the determination of the taxpayer's income, taxed according to the IRPEF income tax brackets for individuals or IRES for companies.

Below we report what has been implemented on the REVESTO platform regarding the application of withholding taxes.

1 The entity that receives the loan amount (the Borrower Company), i.e., the final beneficiary of the funds raised, who contractually undertakes to repay the same and remunerate the lender, will act as a withholding tax agent (as provided in the response of the Italian Revenue Agency no. 687/2021), applying a withholding tax of 26% on account to individuals and non-commercial entities resident in Italy.

2 The proceeds received from loans granted by individuals are classified as capital income and subject to a withholding tax of 26%, and the recipient who has received them will need to verify the need for a tax settlement in the income tax return based on their personal income tax bracket.

3 If the recipient is a company resident in Italy, no withholding tax will be applied at the source. The proceeds of these entities will be considered positive components and included in the commercial income subject to ordinary personal income tax (IRPEF) or corporate income tax (IRES) rules.

4 The proceeds received from loans granted by individuals and companies resident abroad will be subject to a withholding tax of 26% or the lower rate provided by the current double taxation treaty, if applicable, as applied by the Borrower Company acting as a withholding tax agent. To this end, the recipient must provide the Borrower Company with the documentation proving compliance with legal requirements (e.g., tax residency) using the forms available on the website of the Italian Revenue Agency (at the following link).

When it comes to declaring received interests, how should it be done? The total amount of interests received during the previous fiscal year from investments made on REVESTO must be declared according to the cash basis principle and based on the type of taxpayer:

For Individuals - INDIVIDUALS INCOME TAX RETURN (PF) The total amount of interests received from one or more investments must be reported in section IA of form RL2, with the code 1 "interests and other proceeds from capital given on loan and other contracts" indicated as the type of income. Then, in the income column, the total amount of interests received must be indicated, and in the withholding tax row, the total amount of withholding taxes suffered must be indicated.

For Individuals - 730 FORM The total amount of interests received from one or more investments must be reported in row D2, indicating: In column 1 (type of income), the code 1 "interests and other proceeds from capital given on loan and other contracts". In column 2 (income), the overall amount of interests related to the type indicated in column 1. In column 4 (withholding taxes), the overall amount of withholding taxes suffered.

For Capital Companies (Legal Entities) As these are capital gains, they will be considered along with other types of income and subject to IRES.

The tax monitoring on foreign payment accounts (Quadro RW) The payment account, opened by the user with the payment institution Lemonway (under French law) through REVESTO, is assimilated to a foreign current account for the sole purpose of applying tax monitoring (Response of the Italian Revenue Agency No. 155/2022).

The balance of sums in that account is therefore subject to the obligation of Tax Monitoring, with the consequent completion of Quadro RW of the Model Unico, pursuant to Article 4 of Legislative Decree No. 167/1990 to be attached to one's income tax return, ONLY in the following specific cases:

- If the average balance* of the foreign payment account during the previous calendar year exceeds €5,000.

- If the payment account exceeds the threshold of €15,000, even for only one day, during the tax period, even if the average balance was less than €5,000.

The calculation of the average annual balance is determined by dividing the sum of daily balances by 365, regardless of the number of days the payment account is active. Pursuant to Article 19, paragraphs 18 to 22, of Legislative Decree No. 201/2011, the following subjects resident in Italy are required to complete Quadro RW and subject to the tax on the value of financial products, current accounts, and savings books held abroad (IVAFE):

Individuals; Non-Commercial Entities, including Trusts; Simple Partnerships (therefore, Partnerships and Corporations, Snc, Srl, Spa, are EXCLUDED). With Resolution No. 56/E of 25/09/2020, the Italian Revenue Agency clarified that IVAFE tax for payment accounts opened through crowdfunding platforms DOES NOT HAVE TO BE PAID. However, the obligation of tax monitoring remains in the cases specified above.