May 2009

Italy issued circular n. 26/E of May 21, 2009 which provides clarifications on the new EU dividend withholding tax. The reduced tax rate of 1.375 percent applies to dividends paid to companies that are resident in an EU member state and are subject to corporate tax in their own state of residence, even though they do not pay any tax on their income due to an exemption or other particular tax regime that applies in that state.
Continue Reading Circular 26/E of May 21, 2009 Provides Guidance on EU Dividends Withholding Tax

Italian Supreme Court in judgment n. 8487 of April 8, 2009 placed upon taxpayers the burden to prove the existence of valid economic reasons to avoid the application of anti abuse provision and denial of tax benefits in tax avoidance transactions. The decision contradicts a previous ruling, n. 1465 issued on January 21, 2009 in which the burden of proof was placed upon the tax administration.
Continue Reading Italian Supreme Court Held That Burden of Proof in Tax Avoidance Cases is Upon Taxpayers

New law targets the use of sale and repurchase agreements and securities lending transactions for tax advantages. According to the new law, the repo buyer or borrower in a securities lending transaction is eligible for tax benefits such as credits for withholding taxes or foreign taxes or participation exemption for dividends on stock, only if and to the extent those benefits could be attributed to the repo seller or securities lender. The new provision is aimed at stopping transaction such as dividend washing or dividend stripping, in which the a holder of securities who would not be eligible for certain tax benefits, transfer those securities to an accommodating party, who collects the benefits, in exchange for an equivalent economic consideration.
Continue Reading New Law Targets Tax Abuse of Repos, Securities Lending Transactions