Definitions

1. «asset», any right, power, faculty, or expectation susceptible to economic valuation;
2. «trust assets», the assets subject to a trust pursuant to Article 12 of the Law on Trusts;
3. «law», this law and its subsequent amendments and additions;
4. «Law on Trusts», the law of the Republic of San Marino regulating the institution of the trust and its subsequent amendments and additions;
5. «tax period», each calendar year, or, if different, each trust administration period not exceeding twelve months;
6. «authorized trustees», trustees who have received authorization to exercise the office pursuant to the Law on Trusts;
7. «fair market value», the value determined:

1. for shares, bonds, and other financial assets traded on regulated markets, based on the arithmetic mean of the prices recorded in the last calendar month preceding the reference date;
2. for other shares, quotas of non-joint-stock companies, securities or equity participations in entities other than companies, in proportion to the value of the economic capital of the company or entity, or, for newly established companies or entities, to the total economic value of the contributions;
3. for bonds and other financial assets other than those indicated in points (I) and (II) above, comparatively with respect to the fair market value of securities having similar characteristics traded on regulated markets and, failing that, based on other objectively determinable elements;
4. for assets other than those indicated in points (I), (II), and (III) above and for services, based on the average price or consideration charged for goods and services of the same or similar kind, in free competition conditions and at the same marketing stage, at the time and place where the goods or services were acquired or provided, and, failing that, at the nearest time and place.

Trust income tax

The trust is subject to the trust income tax.

The trust income tax rate is that provided by Law no. 166 of December 16, 2016 and subsequent amendments and additions.

The obligations of declaration, liquidation, and payment of the trust income tax fall on the trustee, who is jointly and severally liable for the tax obligation of the trust.

Reporting of the trust’s asset, financial, and income situation

For the purposes of applying the law, the trustee must keep accounting records of the administrative events affecting the assets of each trust for which they hold the office of trustee. The accounting records must be kept, separately for each trust, in a systematic manner and according to rules of orderly accounting, being intended to analytically follow the variations occurring in the consistency of the trust assets.

The trustee draws up the inventory of the trust assets, together with a written report containing the summary of the consistency and composition of the aforementioned trust assets from the date on which the trust begins to have effect, pursuant to Article 10 of the Law on Trusts and, subsequently, at least every twelve months, also highlighting, in this context, the modifying events that have affected the aforementioned assets. The inventory must be drawn up in such a way as to distinguish the capital from the income and fruits deriving from the trust assets.

The trustee must prepare a summary statement of the aforementioned income and fruits realized and collected by the trust in each tax period.

The periodic inventory and the summary statement of the income and fruits realized and collected by the trust must be drawn up and signed by the trustee within five months from the closing date of each tax period.

Determination of the taxable income of the trust

The taxable income of the trust is determined by applying the profitability coefficient of 80 percent to the total amount of income and fruits, in cash and in kind, deriving from the trust assets, including as compensation for loss of earnings, realized and collected in each tax period. The aforementioned amount does not include income and fruits deriving from real estate located in the territory of the Republic of San Marino.

The profitability coefficient referred to in the previous paragraph is however equal to ten percent if the trustee reinvests them, and does not distribute them, for a period of at least 24 months from the date of collection and exercises a specific option in the tax return. This option cannot be exercised with reference to income and fruits deriving from trust assets consisting of profits, dividends, or profit participation quotas distributed by companies or entities tax resident, or in any case domiciled, in States or territories with a privileged tax regime, identified by Decree no. 2 of January 24, 2005.

By way of derogation from the provisions of the previous paragraphs, it is always possible to determine the taxable income of the trust analytically, without applying any profitability coefficient, by deducting from all the income and fruits deriving from the trust assets the costs related to the administration and management of the trust assets incurred and paid in the calendar year, which must be documented and indicated in a summary statement attached to the tax return.

For income deriving from real estate located in the territory of the Republic of San Marino and included among the trust assets, the provisions on income taxes provided for by Law no. 166 of December 16, 2016 and subsequent amendments and additions apply, with reference to companies and entities with legal personality that are tax resident in the territory of the Republic of San Marino. Income produced as a result of the ownership of rights relating to the aforementioned real estate contributes, together with the income determined pursuant to the preceding paragraphs, to the formation of the total income of the trust.

Tax credit for income produced abroad

Taxes definitively paid abroad on the income and fruits realized and collected by the trustee on behalf of the trust are deductible from the income taxes owed by the trust pursuant to Law no. 166 of December 16, 2016 and subsequent amendments and additions, within the limits established in the previous paragraphs.

Withholding taxes on deeds attributing income and fruits

Upon the attribution to non-tax-resident beneficiaries of income and fruits deriving from trust assets, defined by a specific Regency decree, the trustee applies a final withholding tax of fifteen per cent on the sums or on the fair market value of the attributed assets. Within two months from the end of each tax period, the trustee communicates to the Tax Authority of the Republic of San Marino the citizenship and residence of the actual economic beneficiaries of the aforementioned attributions made during the same, as well as the amount of the corresponding withholding taxes applied.

However, the trustee does not apply any withholding tax if, within two months from the end of the tax period in which the attributions of income and fruits deriving from trust assets referred to in the first paragraph occurred, they also communicate to the Tax Authority of the Republic of San Marino the personal details of the actual economic beneficiaries of the aforementioned attributions, indicating their personal data, citizenship, residence and any other requested data or information.

In case of attributions in favor of tax-resident beneficiaries of income and fruits deriving from trust assets, the trustee is required to communicate to the Tax Authority of the Republic of San Marino, within two months from the end of the tax period in which they occurred, the personal details of the actual economic beneficiaries of the aforementioned attributions, indicating their personal data, citizenship and any other requested data or information.

The rules referred to in the previous paragraphs apply, insofar as compatible, also in case of final distribution of the trust assets, albeit with exclusive reference to the income and fruits deriving from the aforementioned assets.

The procedures for executing the communications are identified by Regency decree.

The payment of the withholding taxes must take place within the two-month period following that of their application.

Submission of the trust income tax return. Payment of the trust income tax. Assessment of the trust income tax

Within five months from the end of each tax period the trustee submits the income tax return for each trust for which they hold the office of trustee and pays the trust income tax calculated in accordance with the provisions of the law.

The procedures for submitting the tax return referred to in the previous paragraph and for paying the trust income tax are identified by Regency decree.

The ex officio or amending assessment act must be notified, under penalty of forfeiture, by December 31 of the second year following that in which the tax return to which the assessment refers was submitted or should have been submitted. In case of omitted declaration or its nullity the assessment act must be notified by December 31 of the third year following that in which the declaration should have been submitted.

Other taxes and duties of the trust

No other tax, apart from those provided for, is due for deeds of disposition by way of gift, made by the settlor in favor of the trustee, or through which the trust assets or the income and fruits deriving from trust assets are attributed to the beneficiaries, including in the context of their final distribution, with the exception of:

1. for the registration fee of the excerpt of the trust establishing deed in the Register of Trusts, equal to 500.00 Euros;
2. for the annual maintenance fee for the registration of the trust in the aforementioned Register, equal to 250.00 Euros;
3. for the registration fee of the amendments to the provisions contained in the excerpt transcribed in the aforementioned Register, equal to 150.00 Euros;
4. for the import tax referred to in Law no. 40 of December 22, 1972 and subsequent amendments, relating to the import of goods and related services into the Republic of San Marino;
5. for the registration tax referred to in Law no. 85 of October 29, 1981 and subsequent amendments, relating to deeds of transfer of real estate located in the Republic of San Marino in favor of the beneficiaries, which, regardless of the fact that they are onerous or gratuitous, are in any case subject to registration formalities, through the payment of the tax provided for in no. 1, Tariff “A”, attached to the aforementioned law and subsequent amendments.
   All deeds relating to the trust, other than those for which the law provides otherwise, are subject to registration exempt from tax.

The payment of the registration fees is carried out by the person who requested the registration of the excerpt, or its amendment. The annual tax is paid by the trustee by January 31 of each year. The payment of the import and registration taxes takes place in the ways and timing provided by the respective reference laws.

For anything not provided for, the rules on prescription, assessment, collection, and administrative and criminal penalties provided for companies and entities with legal personality that are tax resident in the territory of the Republic of San Marino apply.