Revised Italy-Canada DTA Finally Comes Into Effect

by Ulrika Lomas, Tax-News.com, Brussels

01 December 2011

The revised double taxation agreement (DTA) between Canada and Italy, originally signed on June 3, 2002, entered into force on November 25, 2011.

The new DTA replaces that signed on November 17, 1977, as modified by a protocol signed on March 20, 1989. It reduces further the withholding taxes to be applied by each country, and, while encouraging further trade and investment between the two countries, is also expected to benefit, in particular, the many individuals, said to be more than one million, of Italian origin who are now resident in Canada.

Except in the case of dividends paid by a non-resident-owned investment corporation that is a resident of Canada, a 5% withholding tax rate will now apply to dividends received by qualifying persons holding at least 10% of the share capital of the paying companies; otherwise a 15% withholding tax will apply.

In addition, source taxation on interest will not exceed 10%, while the withholding tax on royalties will not be greater than 5% of the gross amount in respect of payments for the use of computer software or any patent concerning industrial, commercial or scientific use; or 10% of the gross amount of the royalties in all other cases.

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