With its private letter ruling n. 506 of October 30, 2020 (Ruling 506_2020), the Italian Tax Agency ruled that the Italian protector of a foreign trust which holds foreign financial assets and accounts to the benefit of an Italian resident individual does not qualify as beneficial owner of the trust. As a consequence, according to the Tax Agency – which upheld the taxpayer’s position as stated in the ruling request – the Italian…

In its Supreme Court Ruling n. 21695-2020 (issued on October 8, 2020) the Italian Supreme Court held that an individual (the “Taxpayer”) who is classified as a resident non domiciled in the U.K., is not eligible for the benefits of the income tax treaty between Italy and the U.K. of October 21, 1988, entered into force on December 31, 1990 and effective in Italy on January 1, 1990 (see U.K.-Italy Tax Treaty, the “Treaty”),…

Italy’s Supreme Court’s ruling n. 26965 of November 26, 2020 provides a clear example of how things can quickly turn for the worse, for an ill-advised taxpayer who fails to report a foreign financial account on his Italian income tax return, and then fails to properly handle the following tax inquiry and audit stemming from it. According to the facts reported in the ruling, the Italian Tax Agency, pursuant to the provisions of the Directive…

With Circular n. 33 of December 28, 2020, Italy’s Tax Agency provided administrative guidance on the special tax regime for new resident workers, professionals and entrepreneurs. The special tax regime, amended and extended in 2019, provides a 70 percent exemption from tax for income earned by individuals who establish their tax residence in Italy. Eligible taxpayers include Italian and foreign nationals who (1) were not Italian tax residents in the two preceding tax years, (2)…

On November 20, 2020 Italy’s Minister of Economy and Finance published its ministerial decree dated November 17, 2020, which contains specific provisions on the meaning and enforcement of the main benefit test of COUNCIL DIRECTIVE (EU) 2018/822 of 25 May 2018 on mandatory reporting of cross border arrangements (commonly referred to as “DAC6”). Following the ministerial decree, on December 28, 2020 Italy’s Tax Agency published on its website a draft tax circular which provides administrative…

By now, Italian tax practitioners and tax scholars have had the opportunity to report on Italian Supreme Court’s ruling n. 14756 of July 10, 2020 (Cass.14756-20), which ruled that interest paid by an Italian operating subsidiary to its Luxembourg direct holding company is eligible for the withholding tax exemption granted under article 26-quater of Presidential Decree n. 600 of September 29, 1973, which implemented the provisions of the E.U. Directive n. 2003/49/EC of…

With some years now on record after the enactment of Italy’s tax rules on special tax regime for high net worth individuals, we attach and article (Italy’s Special Tax Regime for High Net Worth Individuals, Three Years In) recently published on the topic. The distinctive features of the Italian special tax regime are the following: – a low fixed amount tax in lieu of the Italian regular income tax (100,000 euro, with an…