Hi, guys Please, can anybody provide the information on calculation basis of witholding tax on bonds issued in Italy (tax rate is 12.5% I guess)? The case is following: 1) the bonds were held 200 days (no coupon payments at that period) 2) clean price decreased during that period by 1% Maybe also any links to documents (preferable in english 
Ok, so investor had a 1% loss and you’re wondering about witholding taxes. Witholding taxes is a way to make sure that (at least some) taxes are collected. But in this case, the investor recorded a capital loss (and didn’t receive any dividend) - as such, he would be entitled to a tax credit. Why would you have any witholding? Again, there are no taxes due, the investor actually can use this transaction to reduce his tax liability. witholding tax = 0
* Loss has to be realized in order for tax credit to kick in. If loss is unlrealized, then there is no tax implication whatsoever.
Hello SerGrey, treatment of ‘accrued interest/interest paid’ and ‘loss/gain in transaction’ is different in italian market. In this case withholding tax cacluation will be following: 1. 12.5% (Accrued interest of 200 days) = +ve value (This is due on accrual basis) 2. 12.5% (Loss in transaction net of accrued inteterest) = - ve value (this is due only at realization) Other things to consider: - Non-Residents are exempt in case of double-taxation treaty with the investor’s country… - Few bonds are even taxed at 27% - 30% (Dynamic information, only italian tax consultant or deep study can help us here) - Maturity of the bond (less or more tahn 18months) also defines the applicable tax… I hope it will help… Rgds, Anuj
Thanx a lot, guys! It definitely will help! So for me the main uncertainty was if in case of italian bonds only coupon payments are imposed with income tax or capital gain/loss does either. To be honest I hoped somebody who dealt exactly with italian bonds would share his experience Best regards!