Mutual funds and pension funds towards fairer taxation

One piece of legislation is still missing for the full implementation of the tax delegation law No. 111/2023: the revision of the taxation of financial income. Where do we stand and what can we still expect? This was the topic of the round table organised by Plus24 on the occasion of the 28th edition of the Premio Alto Rendimento, an award that Il Sole 24 Ore gives to the best mutual fund managers.

Article 5(D) of the tax delegation envisages no less than 10 guiding principles and criteria that aim to create a single income category (overcoming the distinction between capital income and other income), determining the value of such income on the basis of the cash principle and ensuring a broader possibility of offsetting positive and negative components. These changes have been awaited by operators and investors for decades and are necessary to overcome a number of distortions in our financial income taxation system. Provisions, however, not yet implemented due to the absence of the necessary financial coverage.

In the course of his speech, the Deputy Minister for the Economy and Finance, Maurizio Leo, reiterated the government's desire to 'overcome the current approach of taxing financial annuities on accrued income, which is now rooted in the past, for a fairer taxation on realised income, in order to align it with the basic rules of our tax system where the prerequisite for the tax is the actual availability of income'. But this would result in a loss of revenue for the state coffers that goes against the respect of budgetary constraints. "We must proceed carefully," Leo continued, "but our goal is to seek resources in the next Budget Law to intervene on a number of fronts: I am thinking of equating the taxation of securities funds (traditional open-end mutual funds, ed.) with that of real estate funds in order to bring the former also under the discipline of miscellaneous income of a financial nature. And the alignment of the 26% tax rate, currently applicable to capital gains earned by professional pension funds, to 20% to bring them into line with the regime envisaged for pension funds". In this regard, the deputy minister emphasised, however, that the relief must be reflected in benefits for the country's economic system with greater investment in the real economy by the funds.

Deputy Minister Leo's words were well received by the other panelists. "It would be a good step forward to overcome the double track issue on the taxation of income from mutual funds, which today entails the impossibility of offsetting any gains realised with funds and ETFs with capital losses that have been borne by investors with the same or other instruments," commented Andrea Turi, head of Consob's Intermediaries Supervision and Investor Protection Division. "Other instruments such as Etc's, which in common perception are assimilable to Etf's, already allow this. Asymmetries that can lead the tax regime of different financial instruments to be more or less favourable depending on contingent situations.

"I am aware that we need to intervene surgically,' said Giuseppe Corasaniti, professor of tax law at the University of Brescia. 'It would be a small big step towards fairness of treatment among the various financial products that are currently subject to tax arbitrage phenomena, and to achieve this, given that we need to find the resources to cover the shortfall in revenue, it would first be necessary to re-qualify for tax purposes the income (capital gains) from holdings in OICRs as capital gains (miscellaneous income). And then, prospectively, allow them to be offset against future capital losses realised by investors with the same financial instruments and not against past capital losses realised prior to the regulatory change. Also to be welcomed is the intervention on professional funds, which are also collectors of savings with a pension purpose. Today, the funds are subjected to a double penalty: not only are the accrual phase returns taxed at 26 per cent, instead of 20 per cent like pension funds, but also when benefits are paid out, the already taxed return is not deducted and is all taxed at Irpef. It is therefore to be hoped that the government will find the resources to overcome at least these two obvious distortions.