Italy: Royalties taxation, reduced withholding tax rate | KPMG Global
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Italy: Court decisions on royalties taxation, reduced withholding tax rate

Italy: Royalties taxation, reduced withholding tax rate

A court in Milan held that payments made by an Italian distributor to foreign suppliers for the right to distribute copies of software, but without any rights to exploit and reproduce the program, are not royalties but represent business income. Accordingly, such payments are subject to withholding tax (at a rate of 30%).


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Another court decision, also issued by a court in Milan, clarifies that to claim a reduced withholding tax rate under an income tax treaty or the EU Parent-Subsidiary Directive, the foreign recipient of the income (royalties and dividends) must demonstrate that it is the actual beneficiary of the income. A mere certificate of residence, issued by the foreign tax authorities, is not sufficient.


Read a March 2017 report [PDF 182 KB] prepared by the KPMG member firm in Italy

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