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The OECD Committee on Fiscal Affairs has released as a discussion draft a Report on “The Granting of Treaty Benefits with respect to the Income of Collective Investment Vehicles”(PDF) which contains proposed changes to the Commentary on the OECD Model Tax Convention dealing with the question of the extent to which either collective investment vehicles (CIVs) or their investors are entitled to treaty benefits on income received by the CIVs.  The Report is a modified version of the Report “Granting of Treaty Benefits with respect to the Income of Collective Investment Vehicles” (PDF) of the Informal Consultative Group on the Taxation of Collective Investment Vehicles and Procedures for Tax Relief for Cross-Border Investors (“ICG”) which was released on 12 January 2009. In that original Report, the ICG addressed the legal and policy issues specific to CIVs and formulated a comprehensive set of recommendations addressing the issues presented by CIVs in the cross-border context.

In connection with the enactment of its own tax amnesty (which permits the repatriation or regularization of undeclared foreign investments with the payment of a very generous 5% flat tax on the fair market value of the undeclared assets), Italy is cracking down on tax havens, especially those across the border such as Switzerland, Liechtenstein…

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.…

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.…

Italy authorized the ratification of the new U.S.-Italy tax treaty (the “1999 Treaty”), together with a protocol and memorandum of understanding.

The 1999 Treaty shall enter into force on the date on which the instruments of ratification are exchanged and shall apply to taxable periods beginning on or after the first day of the following year.

However, for withholding taxes, the 1999 Treaty shall apply to payments made or accrued on or after the first day of the second month following its entry into force.

The 1999 Treaty contains several new important provisions, including provisions on limitation on benefits, arbitration, branch profits tax, reduced withholding rates, creditability of the Italian regional tax on production activities, and application of treaty benefits to partnerships.…

Italian Supreme Court denied treaty benefits to dividends paid to a US limited partnership. US LP did not qualify for treaty benefits under the US-Italy treaty since fiscally transparent in the US. A Japanese fund member of the US LP failed to qualify for treaty benefits under the Italy-Japan treaty since it was not the legal recipient of the dividend.…