WITHOLDING EXEMPTION FOR DIVIDEND PAYMENTS TO THE SWISS HOLDING
Italian Tax Agency, with ruling no. 57 of February 15th 2019, addressed the issue of the exemption from withholding tax on dividends distributed by an Italian subsidiary to a parent company resident in Switzerland on the provisions of the Agreement between the EU and Switzerland of October 26th 2004 (art. 15).
Notably, the Agency stated that the exemption of outbound dividends from the Italian withholding tax is granted only if the parent company is subject to the ordinary corporate tax in Switzerland as any exemption of the Swiss parent company at the cantonal and/or municipal level would impede the application of the withholding tax exemption.
In the specific ruling’s case, the parent company had forfeited its status as a holding company under Swiss law since 2017, thereby giving up the exemption at the cantonal and municipal level. Furthermore, under Swiss tax law the dividends received would be ordinary taxed.
The Tax Agency also clarified that the Swiss participation exemption regime would not compromise the application of the exemption at source.
Our staff is available for any clarification.