Taxation and savings: Italia offside on PIRs and bonds – the EU launches infringement proceedings

Italia finds itself offside with the EU over tax and savings. The Commission has launched a dual infringement procedure concerning PIRs (individual savings plans) and the tax treatment of bonds. In the case of PIRs, Brussels’ complaint is that the favourable tax regime discourages residents from investing in companies in other Member States, limiting their opportunities to diversify their investments within the EU’s single market. As regards bonds, however, the issue raised by the EU is that the custody and administration services provided by financial intermediaries established in other EU Member Statesthe EU or in EEA countries without a permanent establishment in Italia are less attractive than equivalent services provided by Italian financial intermediaries and discourage non-resident investors from using such financial intermediaries.

Individual savings plans (PIRs) offer a tax regime under which income derived from the investments made is exempt from taxation. The main conditions are that at least 70 per cent of the portfolio must consist of shares and bonds issued by Italian companies, and that the investment must be held for at least five years. The EU Commission’s complaint against Italia regarding PIRs and against Slovenia regarding individual investment accounts is that they ‘constitute an unjustified restriction on the free movement of capital’. In particular, Brussels argues that the preferential legislation of Italia and Slovenia discourages ‘their respective residents from investing in companies in other Member States, thereby limiting their opportunities to diversify their investments within the EU single market’. Consequently, ‘this also constitutes, amongst other things, an obstacle for non-domestic companies wishing to attract cross-border investment from Italia and Slovenia respectively, thereby contributing to the fragmentation of the EU’s capital markets’.

Another issue on which Brussels has launched infringement proceedings against Italia concerns bonds. The European Commission alleges that Italia has failed to bring its legislation on the tax treatment of interest and other income derived from Italian bonds into line with the rules on the freedom to provide services (Article 56 of the Treaty on the Functioning of the European Union and Article 36 of the Agreement on the European Economic Area). Under Italian tax legislation, interest and other income derived from Italian corporate and government bonds are generally subject to withholding tax. Some non-resident investors may be eligible for a tax exemption. This applies only where the bonds are held with a financial intermediary resident in Italia, the Italian permanent establishment of a non-resident intermediary or, in certain cases, a non-resident intermediary that has appointed an Italian tax representative. These conditions make the custody and administration services provided by financial intermediaries established in other EU Member States or in EEA countries without a permanent establishment in Italia less attractive than equivalent services provided by Italian financial intermediaries, and discourage non-resident investors from using such financial intermediaries.

As Brussels points out, ‘the decision forms part of the Commission’s enforcement activities aimed at removing barriers in the single market across 11 priority areas, as announced in the communication “A simpler, clearer and better-enforced EU regulatory framework ’ (COM(2026) 380 final, Annex II) and in the 2025 communication ‘A Union of Savings and Investment: A Strategy to Promote Citizens’ Wealth and Economic Competitiveness in the EU’ (COM(2025) 124 final)’.

In the case of both PIRs and bonds, the Commission has sent a letter of formal notice to Italia, which now has two months to respond and remedy the shortcomings highlighted by the Commission. In the absence of a satisfactory response, the Commission may decide to issue a reasoned opinion.