BREXIT: ITALIAN WITHHOLDING TAX ON LOAN INTEREST
With answer n. 838 of 21 December 2021, the Italian Tax Authority specified that the exclusion from withholding tax referred to in Article 26, paragraph 5-bis, of Presidential Decree no. 600/1973 on interest and other income (including also bank commissions) deriving from medium / long-term loans granted to companies resident in Italy cannot be applied to UK Banks as not established in a Member State of the European Union.
Italian legislation provides for the application of a withholding tax at a rate of 26% for interest out of Italy. As an alternative to national taxation, it is possible to apply the provision of the Italy - United Kingdom Convention, which provides, in Article 11, for a maximum withholding tax of 10% on interest outgoing from Italy.
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