How Tobin Tax and certain regulatory duties affect Block Trades in Italy

Italian Law No. 228 dated December 24, 2012, which approved the 2013 budget, contemplates, among others, a new tax applicable to certain financial transactions (the “Tobin Tax”).

The Tobin Tax will apply to transactions, even if executed abroad, involving shares and equity-like financial securities issued by both listed and non-listed companies resident in Italy and derivatives substantially underlying such securities. The tax will also apply to high-frequency trades relating to the above securities and derivatives occurring on the Italian financial markets. Issuance of new shares and transactions on debt securities will be outside the scope of the Tobin Tax.

1. The Tobin Tax applicable to Block Trades

As of March 1, 2013, Block Trades of shares issued by Italian companies will be subject to the Tobin Tax at the rate of 0.22% (i.e. the tax rate applicable to over the-counter transactions), levied on the transaction value. As of 2014, the tax rate will decrease to 0.20%. The Tobin Tax will be due irrespective of whether the Block Trades are executed outside of Italy and all the parties involved (other than the issuer) are not resident in Italy.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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