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Italy: New income tax treaty signed with China

Italy: New income tax treaty signed with China

Representatives of the governments of Italy and China in late March 2019 signed a new income tax treaty—an agreement for the avoidance of double taxation and to prevent fiscal evasion.


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The new income tax treaty, once ratified and with its entry into force, will replace the existing treaty (signed in 1986 and in force since 1990). Under the existing Italy-China income tax treaty, the withholding tax rate for dividends, interest, and royalties is 10%.

The withholding tax rates under the new income tax treaty are:

  • 5% or 10% for dividends
  • 0% or 8% or 10% for interest
  • 5% or 10% for royalties

The new income tax treaty also modifies the allocation of taxing rights with regard to capital gains. Any capital gains not governed by Article 13 of the new treaty will be taxed only in the transferor’s country of residence. However, the source state’s right to tax is confirmed when capital gains are derived from the alienation of immovable property, movable property that is part of the business property of a permanent establishment, and shares representing at least 25% of the share capital of an entity resident in either Italy or China.

Read an April 2019 report [PDF 161 KB] prepared by the KPMG member firm in Italy

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