PRESS RELEASE
TAX TREATMENT OF THE COMPENSATION PAID TO BPVI SHAREHOLDERS WHO ACCEPTED THE
SETTLEMENT OFFER
Vicenza, 22 May 2017 – Further to newspaper articles published in recent days, the Bank reaffirms that, upon
structuring the Settlement Offer, it conducted an in-depth analysis – supported by a primary legal and tax
advisor – on the tax treatment applicable to the 9 euro per share compensation due to Shareholders who
accepted the Offer.
At the end of the analysis, the Bank deemed that, based on the applicable tax legislation, the compensation
paid to the shareholders who accepted the offer is by its own nature an indemnity and does not generate a
separately and immediately taxable income for the shareholders concerned. In keeping with this line of
thought, the Bank has not retained any withholding tax upon paying the compensation.
The compensation must be deducted from the shares’ purchasing price recognized as tax basis, so that upon
selling the shares, the amount already cashed in by the shareholder by accepting the Settlement Offer will
be duly taken into account; notably, by reducing any capital loss that may have been generated (that can be
offset against other capital gains generated on other securities), or by increasing (if applicable) the amount
of the capital gain against the original purchase price.
Specifically, the compensation is taxable separately, particularly with regard to individuals, simple
partnerships or nonprofit organizations, it cannot be taxed as sundry income to be reported in the tax return
as originating from the “undertaking of obligations to do, not to do or allow” pursuant to article 67, par. 1,
lett. l of TUIR.
In a nutshell, (i) the compensation is not taxed at the time of disbursement because it refunds the
participating shareholders of the effects of a consequential loss they suffered, (ii) the refund shall be taken
into account for tax purposes when selling or redeeming the securities.
An example may better clarify the concept. In the event that an individual shareholder had purchased a share
at 62.50 Euro and by accepting the offer had cashed in 9 euro, the taxable carrying amount of the share
would decrease from 62.50 euro to 53.50 (62.50-9=53.50). Hence, should the share be sold or redeemed in
the future, let’s assume at 1 euro, the realized capital loss would come in at 52.50 euro (53.50-1=52.50). The
capital loss of 52.50 euro may be offset against any other capital gains realized on other securities. Clearly,
this capital loss, and therefore the tax benefit deriving from the possibility of offsetting this capital loss
against any capital gains realized by selling other financial instruments, would have been higher, i.e., 61.50
(62.50-1=61.50), had the shareholder not accepted the offer and had then sold or redeemed the share at 1
euro.
A different conclusion, reported also by some newspaper articles published recently, according to which the
amount paid by the Bank would qualify as “sundry income” (originating from the “undertaking of obligations
to do, not to do or allow” pursuant to article 67, par. 1, lett. l of TUIR) and therefore subject to separate and
outright taxation to be paid by the individual, presupposes that the amount is paid only on condition that no
legal action be started or continued against the Bank. This pre-condition however does not reflect the legal
substance and the form of the settlement agreements entered with the bank under the Settlement Offer.
Simply by reading them, it is clear that the commitment undertaken by the participants in the Offer not to
start or continue legal actions against the Bank does not represent the agreements’ qualifying element, but
rather it is consequent and collateral to the compensation, albeit lump-sum, recognized to the shareholder
against the damage suffered, i.e., the loss in share value, with the aim of safeguarding the Bank’s image and
the trust relationship with its customers. Waiving legal actions is one of the normal and ancillary effects of
the settlement, which hinges – in substance – on the compensation of damages suffered by the shareholders
in connection with their investment in BPVi shares (as explicitly indicated both in the preamble of the
Settlement Agreement, where it is specified that the compensation is recognized as a refund of alleged losses
in connection with BPVi Shares, and under art. 3, according to which the compensation is recognized as a
refund and compensation of Damages in connection with BPVi Shares, as better specified in the Agreement).
Hence, the fact that the actions that could be initiated against the Bank – and that have been waived as a
natural and ancillary consequence of the Settlement Offer – were aimed at refunding the (consequential)
damage represented by the equity investment impairment loss, rules out the possibility that the
compensation be recognized as a separate income component, while on the contrary it generates only the
effect of eroding the tax basis (typical effect of refund-based gains).
Banca Popolare di Vicenza
Gruppo Banca Popolare di Vicenza, founded in Vicenza in 1866 – the first Popolare Bank in Veneto – today ranks eleventh among
Italian banks based on total asset, with a market share of 1.7% by number of branches. The Group’s distribution network relies on
roughly 541 points of sale (including branches, financial shops and private banking centers) strewn throughout 16 Italian regions, with
a strong franchise in Veneto and in the entire North-East area and a customer base primarily represented by retail customers, selfemployed professionals and small and medium-sized enterprises.
Banca Popolare di Vicenza (www.popolarevicenza.it) is also on Twitter: sign in at http://twitter.com/popolarevicenza to be informed
of all group initiatives, news and events.
Media Relations:
Investor Relations:
Giampiero Beltotto
Silvia Pillan
Mara Deganello
Fabio Pelati
Mob. 340 0577895
Tel. +39 0444 339645
Tel. +39 0444 339651
Tel. +39 0444 39159
[email protected]
[email protected]
[email protected]
[email protected]