treaties

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Italy’s tax residency for foreign taxpayers buying Italian real estate, and spending significant time in Italy for pleasure or business continues being a very critical and challenging issue. Italy assigns tax residency of individuals based on residence, which means fixed place of living ; domicile, which means main center of interests, or registration on the…

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.

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.…