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Withholding Tax on Interests Accrued on Certain Intercompany Loans

Italy

With a Law Decree in the course of publication, the Italian government has introduced several tax measures with a cross-border impact. Taxand Italy looks at these measures and how they will affect multinational organisations.Among these rules it has been introduced that a 5% withholding tax is to be applied on interests paid by Italian companies to foreign companies when such interest payments are finalised to refund payments of interests and other earnings arisen from securities issued by such foreign companies:

a) listed in EU country stock exchange
b) guaranteed by the Italian paying entities or other controlled company pertaining of the same group of the issuing entity.

Such withholding tax will apply upon the condition that the foreign company receiving the interest is not to be considered as a beneficial owner of the interests pursuant to the EU interest Directive.

Taxand's Take


The wording of the new rules is rather unclear as to when interests already paid at the date of the ruling will enter into force.

Your Taxand contacts for further queries are:
Guido Arie Petraroli
T. +39 02 7260591
E. gpetraroli@fantozzieassociati.it

Alberto Alfredo Ferrario
T. +39 02 7260591
E. aferrario@fantozzieassociati.it

Taxand's Take Author