Introduction
The taxation of outbound dividends has been the subject of intense litigation in Italy and across Europe, particularly where non-E.U. entities are treated less favorably than similarly situated EU-based or domestic recipients operating in similar circumstances. Recent rulings by Italian courts following the European Court of Justice (ECJ) confirm that withholding tax on dividends…
In Ruling No. 144/2025, the Italian tax authorities confirmed that a foreign, fiscally opaque trust can be treated as a separate non-resident taxpayer — and can benefit from the Italian capital gains exemption on sales of non-qualified shares. However, the ruling denied the 1.2% reduced withholding rate on dividends under Article 27(3-bis) TUIR, holding that the benefit is reserved to specific corporate forms listed in EU law, which do not include trusts. What the ruling didn’t address is just as interesting: possible treaty relief under the Italy–Malta tax treaty and potential claims under EU free movement of capital rules.…
Italy’s New Look-Through Rule Hits Trust’s Share Sale
In Ruling No. 175/2025, the Italian Revenue Agency confirmed that the “immovable-property-rich” look-through rule under Article 23(1-bis) TUIR—introduced in the 2023 budget law—applies in full force to indirect share sales. A non-resident discretionary trust sold shares of a Swiss company whose only asset was an Italian residential property held for over five years. The Agency rejected the taxpayer’s attempt to apply the five-year capital gain exemption for direct property sales, holding that the gain was taxable in Italy at 26%.
The decision aligns with OECD Model Article 13(4) and the Italy–U.S. treaty’s property-rich share rule, confirming Italy’s right to tax such gains regardless of holding period. For planners, the message is clear: exemptions for direct real estate sales don’t carry over to indirect disposals, and treaty coordination will be key to managing double taxation risks.…
