This is a follow-up to Square The Circle of April 2021 (Securitisation Without Securities: New Funding Structures Available to Italian Securitisations) and is written in light of certain clarifications recently issued by the Italian Tax Authority (the “ITA”).

In December 2020, the Italian Budget Law for 2021 introduced, in addition to the traditional asset-backed notes (the “Notes”), an alternative funding tool for Italian securitisation vehicles (the “SPVs”). Now SPVs may fund the acquisition of assets in securitisation transactions through the proceeds of ad hoc financings in the form of loans advanced by lenders authorised to grant loans in Italy (the “Alternative Financings”).

In Square The Circle of April 2021, as clear guidance was lacking in the newly enacted law, we contributed our first thoughts to the debate about which tax regime is applicable to Alternative Financings.

Ever since the enactment of the 2021 Italian Budget Law, no official direction has been provided on the tax regime applicable to Alternative Financings and no consensus has been reached by the operators as to whether Alternative Financings should benefit from the same tax regime applicable to the Notes or – as expressed in Square The Circle of April 2021 – they should fall within the scope of the tax regime applicable to loans generally.

In this uncertain environment, ITA has recently issued a tax ruling on the matter (Tax Ruling no. 571/2022 or the “Tax Ruling”).