Market makers in Italian shares (and related derivatives) located outside the EU (third-country market makers) may benefit from the exemption from the Italian financial transaction tax, as provided for in Consob Resolution no. 18663 of 2 October 2013. A similar tax exemption is available for third-country liquidity providers in Italian shares.
In order to benefit from the market maker fiscal exemption, the following requirements have to be met:
1. the third-country market maker must not be a member of any EU trading venue, nor of any third-country trading venue recognized as equivalent by the EU Commission, on which it performs the market making activity in Italian shares. Third-country market makers which are member of a EU trading venue or of a recognized one benefit from the exemption from the Italian financial transaction tax on the basis of the exemption under Article 17, paragraph 1, of Regulation (EU) no. 236/2012, granted by the competent authority as defined under the same Article 17; and
2. the third-country market maker must be a member of at least one third-country trading venue, not recognized as equivalent by the EU Commission, on which it performs the market making activity in Italian shares; and
3. the market making activity must satisfy the requirement set in ESMA Guidelines of 1st February 2013.
In order to benefit from the liquidity provider fiscal exemption, the third-country liquidity provider must have entered into an agreement with the Italian issuer and must comply with the requirements provided for by accepted market practice called "Liquidity Enhancement Agreements" approved with Consob Resolution no. 16839 of 19 March 2009, with the exception of carrying out the activity on a third country trading venue.
Additionally, for both fiscal exemptions, it is required that the third country trading venue is supervised by a public authority with which Consob has entered into a cooperation agreement and that the market maker/liquidity provider notifies Consob as provided for in Consob Resolution no. 18663 of 2 October 2013.
It is worth highlighting that the two exemptions have fiscal effects only. Thus, when carrying out the activity on a third country trading venue fiscal-exempted market makers have to fully comply with Regulation (EU) no. 236/2012 (e.g. by reporting to Consob their net short positions in Italian shares when the 0.2% threshold is reached) and fiscal-exempted liquidity providers do not benefit from any protections and safeguards foreseen in Regulation (EU) no. 596/2014 with respect to the accepted market practice.
Please note a different procedure applies to European market makers. Pursuant to Article 16, paragraph 3, letter a), first part, of the Decree of the Minister of the Economy and Finance of the 21 February 2013, a European market maker is tax exempted provided that it has obtained, from its national competent authority, the exemption provided for market making activities in the relevant Italian shares under Article 17, paragraph 1 of the Regulation (EU) no. 236/2012.
Finally, exempted market makers/liquidity providers may be required to report to the Italian Revenue Agency (Agenzia delle Entrate) some data on the exempted activities. Please consult the Italian Revenue Agency webpage: https://www.agenziaentrate.gov.it/wps/content/Nsilib/Nsi/Schede/Pagamenti/Imposta+sulle+transazioni+finanziarie/?page=schedepagamenti