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Income tax treaty between Mexico and Italy
The protocol that modifies the Convention for the Avoidance of Double Taxation entered into between Mexico and Italy was published on 16 April 2015 in the Federal Official Gazette. Taxand Mexico discusses the renegotiation.
This protocol amends Article 25 of the convention to include a comprehensive exchange of information between the countries. According to such document it would become effective on the date of its publication.
Other articles of the convention are not modified, so the withholding rates at the state of source would remain as follows:
- Dividends: 15%
- Interest: 10% (by virtue of the application of a Most Favored Nation clause)
- Royalties: 10%
Regarding capital gains, this convention is one of the few executed by Mexico which provides that gains derived from the sale of shares can only be taxed in the country of residence of the seller; except when more than 50% of the value of the shares derives, directly or indirectly, from immovable property situated in a Contracting State.
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Mexico is currently renegotiating several income tax treaties that do not include a comprehensive exchange of information provision. Thus it is likely that some of the treaties concluded in the 90s, such as the treaty with Spain, will be replaced in the short term.