The EU Directive n. 2015/849 (the “IV Directive”) on anti money laundering sets forth new provisions requiring financial institutions and professional individuals to verify their customers or clients by identifying the ultimate “beneficial owner” of an entity, legal arrangement or financial transaction; obtaining and conserving information about their customers and the ultimate beneficial owners, as
Italy’s Supreme Court Denies Treaty Benefits to UK Holding Company Under Beneficial Ownership Clause of UK-Italy Treaty
The Italian Supreme Court with its ruling n. 10792 of May 25, 2016 held that the 5 percent reduced dividend withholding tax provided for under article 10 of UK-Italy Tax Treaty does not apply, when the company that receives the dividends does not prove that it is the "beneficial owner" of the dividend as required…
Italy’s Supreme Courts Rules On Anti Inversion With Denial of Foreign Tax Credit
The Italian Supreme Court, with its ruling n. 8196 of April 22, 2015 held that a NY corporation, wholly owned by an Italian company, and effectively managed and controlled by its Italian shareholders and directors in Italy, had to be treated as an Italian resident company for Italian tax purposes, and was subject to corporate…
No Gift Tax Upon Gratuitous Transfers of Assets To a Trust
The Regional Tax Commission of Lombardy Region (an appellate level tax court including the city and province of Milan in Northern Italy) with its ruling n. 2846/2016 issued on May 13, 2016 held that a gratuitous transfer of property to a trust is not subject to the gift tax. The court’s theory is that the…
Application of Tax Treaties To Fiscally Transparent Entities: US-Italy Perspective
‘Tax Treaties’ ‘US-Italy Tax Treaty’ ‘Fiscally Transparent Entities’…
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New Disclosure Rules for Trusts
On November 25, 2015 we reported on new disclosure rules on trusts, which are part of a bill currently discussed by the Italian Parliament. The bill would implement in Italy the new European Union anti money laundering directive.
We reported further on those rules in the article attached.
Amended Return Not Sufficient To Avoid Penalties For Failure To Report Foreign Assets On Form RW
The Regional Tax Court for the Region Lombardia with ruling n. 3778/67/15 held that the amended income tax return, which an Italian taxpayer may file to integrate a previous incomplete file return after the filing deadline has expired, does not remedy the penalties connected to the failure to file a timely RW form. The information…
Foreign Trusts Subject to Disclosure in Italy
Foreign trusts, with connections to Italy such as Italian located assets, beneficiaries or grantors, and aimed at producing legal and tax effects in Italy, will be subject to full disclosure in Italy including registration in the Italian public register of enterprises regardless of the fact that they are created and administered abroad and governed by foreign law. The disclosure obligation falls upon the trustee, even if residing abroad. Failure to disclose brings with it criminal and monetary penalties.
That is the result of the new transposition in to Italian law of the new EU anti money laundering directive.
The deadline for the implementation of the Directive in the law of the EU Member States is June 2017.
Foreign trustees of foreign trusts with connections to Italy must pay attention to the developments in this area of law.
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Italy’s Supreme Court Holding That Economic Interests Prevail Over Personal Ties In Determining Italian Tax Residency
Italy’s Supreme Court’s decision n. 6501 of March 31, 2015, dealing with the case of an Italian citizen who had most of his personal and family connections in Italy but moved to work in another country (Switzerland), where he had most of his economic and financial interests, ruled that the taxpayer’s economic and financial connections…
Overview of Italy’s Tax Reporting Rules
Italian resident taxpayers are required to report all of their assets held outside of Italy, on form RW of their Italian income tax returns (which include various sections and can be considered the equivalent of the FBAR and other international tax returns that are required to be filed in the United States).
Resident taxpayers subject…