DTA Between Italy And US In Force From January 2010

by Ulrika Lomas, Tax-News.com, Brussels

21 December 2009

The Italian Minister of Foreign Affairs, Paolo Guido Spinelli, and the US Ambassador to Italy, George White, have exchanged documents in Rome confirming that the double taxation agreement (DTA) between Italy and the US has been ratified by both countries.

The DTA was originally approved by the US Senate in 1999. It is now confirmed that, with respect to taxes withheld at source, the DTA shall have effect for amounts paid or credited on or after February 1, 2010. For all other taxes (e.g. salaries and pensions), the new treaty will cover taxable years starting January 1, 2010.

It was further confirmed that the provisions of the DTA include a limit of 5% on source-country withholding tax on certain direct dividends, and a limit of 15% on source-country withholding tax on all other dividends.

There will also be an elimination of source-country withholding tax on certain interest paid to, guaranteed or insured by qualified governmental entities; and interest paid with respect to a sale on credit of goods, merchandise, services, or industrial, commercial or scientific equipment. A limit of 10% source-country withholding tax will apply on all other interest.

Other provisions contain:

• An elimination of source-country withholding tax on royalties for certain literary, artistic or scientific works;
• A limit of 5% source-country withholding tax on royalties for the use of, or the right to use, computer software or industrial, commercial or scientific equipment; and
• A limit of 8% source-country withholding tax on all other royalties.

The Italian Ministry of Foreign Affairs stressed the particular importance of the agreement in encouraging future investment flows between the two countries.

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