With the ruling reply dated February 24, 2021, no. 125, the Italian Revenue Agency clarified that mutual funds which are not authorized to carry out regulated activities, but which are managed by intermediaries subject to supervision, have to be classified as "institutional investors". Therefore, these funds, if set up in countries that grant the exchange of information (specifically the UK), can enjoy the withholding tax exemption provided by article 26, paragraph 5-bis, of Presidential Decree no. 600/1973, on interest deriving from medium and long-term loans granted to Italian companies.
In accordance with Ministerial circular letter n. 23/E/2002, the Italian Revenue Agency specifies that "foreign institutional investor" means an entity which, regardless of its legal status and the tax treatment to which its income is subject in the State in which it is established, carries out and manages investments on its own behalf or on behalf of third parties.
This definition also includes entities "without tax liability" such as mutual funds to the extent that they are subject to forms of supervision in the foreign countries in which they are set up. Furthermore, mutual funds must be established in countries and territories that permit an adequate exchange of information (“white list countries”).
Specifically, the UK fund referred in the answer meets the requirements being: (i) set up in a country (UK) that allows an adequate exchange of information; and (ii) managed by a party authorised by the Financial Conduct Authority (FCA).