DISCRIMINATION IN THE TAXATION OF FOREIGN DIVIDENDS: AN INFRINGEMENT COMPLAINT TO THE EUROPEAN COMMISSION WILL SOON BE FORMALIZED

Natural persons resident in Italy who hold shares in foreign companies are always very puzzled when it is explained to them that if they collect dividends through a bank, a trustee or other Italian financial intermediary, the deduction of 26% pursuant to art. 27, paragraph 4, of D.P.R. n. 600/1973 is applied to the dividend net of the withholding tax made in the foreign State of the issuer, while if they collect the dividend directly abroad, without the intervention of an Italian intermediary, The substitute tax to be paid in the tax return is calculated on the gross dividend, experiencing, in fact, a double taxation (withheld in the foreign state – withheld in Italy).

It seems incomprehensible that the amount of tax on a type of income varies not according to the ability to contribute expressed by the income itself, but by the way it is collected.

The question therefore arises as to whether Italian law complies with the Treaty on the Functioning of the European Union and in particular with the principle of free movement of capital (which also applies in relations with non-EU States) and in particular Directive 88/361/EEC according to which “transactions carried out by residents with foreign financial institutions” (Annex I, point VI.B) – should not be subject to a channelling obligation with Italian financial intermediaries.

The Commission for the examination of the compatibility of Italian tax laws and practices with European Union law, at the Italian Association of Chartered Accountants has therefore prepared the text of an infringement complaint that will soon be forwarded to the European Commission.

Studio STS is available for any study and evaluation of the subject.