With two very important decisions issued on December 23, 2008 and concerning a dividend washing and dividend stripping transaction, the Italian Supreme Court for the first time applied a general anti-avoidance principle deriving directly from the Italian Constitution. According to the Court, the general anti-avoidance principle is an underlying principle of the Italian tax system that applies on top and above of any other specific anti abuse provision of the tax code, and denies the tax benefits of a transaction that lacks economic substance and is entered into for the sole or principal purpose of obtaining a tax advantage.
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