LensCrafters 2003 Annual Report Download - page 23

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ordinary income tax rules. The dividend paid to other subjects different from the above mentioned individuals, who are
resident in Italy for tax purposes, including those companies subject to IRES/IRPEF and foreign companies with
permanent establishment in Italy to which the shares are effectively connected, investment funds, pension funds, real
estate investment funds and subjects excluded from income tax pursuant to Art. 74 of Presidential Decree No.
917/86, are not subject to substitute tax. Dividends paid to entities subject to IRES/IRPEF different from individuals
holding a qualified shareholding or not related to the conduct of a business, will be subject to the ordinary income tax
rules. Entities subject to IRES with taxable period starting before January 1, 2004, and still open at the dividend
payment date will be entitled to a tax credit equal to 51.51 percent of their gross amount, to the extent that such tax
credit is covered by the amount of basket A and B, as provided by art. 105 of Income Tax Law (“TUIR”) before
changes made by Legislative Decree no. 344/2003.
Italian law provides for a 27 percent final substitute tax rate on dividends paid to Italian residents who are exempt
from corporate income tax.
Dividend paid to beneficial owners who are not Italian resident and do not have a permanent establishment in Italy
to which the shares are effectively connected, are subject to 27 percent substitute tax rate. However, reduced rates
(normally 15 percent) of substitute tax on dividends apply to non-residential beneficial owners, who are entitled to and
comply with procedures for claiming benefits under an applicable income tax treaty entered into by Italy. Under the
currently applicable Italy-U.S. Treaty, an Italian substitute tax at a reduced rate of 15 percent will generally apply to
dividends paid by Luxottica Group to a U.S. resident entitled to treaty benefits who complies with the procedures for
claiming such benefits, provided the dividends are not effectively connected with a permanent establishment in Italy
through which the U.S. resident carries on a business or with a fixed base in Italy through which the U.S. resident
performs independent personal services.
The substitute tax regime does not apply if ordinary shares representing a “non-qualified” interest in Luxottica
Group are held by a shareholder in a discretionary investment portfolio managed by an authorized professional
intermediary, and the shareholder elects to be taxed at a flat rate of 12.5 percent on the appreciation of the investment
portfolio accrued at year-end (which appreciation includes any dividends), pursuant to the so-called discretionary
investment portfolio regime - regime del risparmio gestito.
TAX REGIME - HOLDERS OF ADRS
Dividend paid to beneficial owners who are not Italian residents and do not have a permanent establishment in
Italy, are subject to a 27 percent substitute tax rate. Accordingly, the amount of the dividend paid to The Bank of New
York, depositary of Luxottica Group’s ordinary shares represented by ADRs, through UniCredito Italiano S.p.A., as
custodian under the Depositary Agreement between Luxottica Group and The Bank of New York, will be subject to
44