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.
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:
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
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.