Italy: Withholding tax exemption for UCITS on dividends and capital gains; possible actions

Procedures regarding an exemption from withholding tax on dividends and capital gains of UCITS

Procedures regarding an exemption from withholding tax on dividends and capital gains

The Italian custodian association (Assogestioni) issued guidance to clarify procedures regarding an exemption from withholding tax on dividends and capital gains of “undertakings for collective investment in transferable securities” (UCITS).

UCITS funds or non-UCITS funds in the European Union or European Economic Area (EEA) as of 1 January 2021 can benefit from a 0% withholding tax rate on outbound dividends and capital gains—a reduction from the standard withholding tax rate of 26%.

In addition to the withholding tax exemption on interest payments for non-Italian residents listed in the Italian “white list,” a withholding tax exemption may be available for dividends distributed as from 1 January 2021.

While the Italian tax authorities have not, to date, issued guidelines to specify application of the withholding tax exemption for EU/EEA UCITS funds or non-UCITS funds, the Assogestioni issued Circular Letter 26/21/C (12 March 2021) to clarify that the exemption may be claimed by means of a self-declaration.

KPMG observation

With respect to the guidance from the Assogestioni, the Italian tax authorities apparently have not yet approved an official tax form to use regarding claims of the withholding tax exemption. Accordingly, each Italian custodian or withholding agent must identify its own exemption procedure, and this could result in added complexities.

Read a June 2021 report prepared by the KPMG member firm in Luxembourg


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