Share with your friends

Italy: Taxation of interest paid by Italian individuals to Swiss bank

Italy: Taxation of interest paid by Italian individuals

Italy’s tax authorities issued a tax ruling this week in response to an application submitted by a Swiss bank concerning the tax treatment of interest payments made to the bank by Italian individuals.


Related content

The tax ruling (no. 379 of 11 September 2019) substantially confirms and clarifies the position of the tax authorities as previously announced in an October 2018 ruling. These two tax rulings clarify that the withholding tax rate of 12.5% (pursuant to the income tax treaty between Italy and Switzerland) applies with regard to interest payments made by Italian individuals on loans from a Swiss bank. Also, the tax rulings indicate that the Swiss bank must file Italian corporate income tax returns.


The October 2018 tax ruling (no. 41 of 23 October 2018) addresses the general rule on the taxation of interest paid to foreigners by Italians. The general rule under Italian tax law is that foreigners are taxed in Italy only on Italian-source income and that capital income (such as interest) is considered to be Italian-source income if it is paid by an Italian tax resident.

Concerning interest paid by someone who is not a withholding agent (for instance, an individual), the tax must be applied in Italy through the submission of a corporate income tax return by the foreign entity. In the years at issue, the rate of corporate income tax in Italy was 27.5%. The Italy-Switzerland income tax treaty, however, provided for a reduced rate of 12.5% if the recipient of the interest was the effective beneficial owner.

In the 2018 tax ruling, it was concluded that the income tax treaty rate of 12.5% applies also to foreign banks that receive interest payments from a person who is not a withholding agent. In this situation, it was necessary that the bank submit a corporate income tax return in Italy.


The two tax rulings provide that foreign banks that have made loans to tax residents of Italy and that failed to file a corporate income tax return in Italy to declare the income derived from the loans may encounter certain risks including interest and penalties (on top of the tax due).

Read a September 2019 report [PDF 189 KB] prepared by the KPMG member firm in Italy

© 2021 KPMG LLP, a Delaware limited liability partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

For more detail about the structure of the KPMG global organization please visit

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today

Sign up today