Italy: Withholding tax on dividends paid to investment fund breaches EU law (court decision)
Imposition of Italian withholding tax on dividends paid to a Luxembourg UCITS in the form of a SICAV is discriminatory and breaches EU law
Imposition of Italian withholding tax on dividends paid to a Luxembourg UCITS
The second-level tax court of Abruzzo on 21 December 2022 held that the imposition of Italian withholding tax on dividends paid to a Luxembourg UCITS (Undertakings for Collective Investment in Transferable Securities) in the form of a SICAV (Société d'investissement à Capital Variable) is discriminatory and breaches EU law.
This decision is consistent with the one issued by the first-level tax court of Pescara on 7 February 2022. Read TaxNewsFlash
KPMG observation
Foreign entities need to consider filing withholding tax claims in Italy to safeguard their right to a refund. They need to initiate court proceedings in the rare case that the tax authority does not reply within 90 days of the filing date of the claim.
The statutory time limit to initiate court proceedings is 10 years plus 90 days from the filing date of the claim. If a claim is successful, 2% annual interest is normally added to the refunded amount.
Read a February 2023 report [PDF 276 KB] prepared by the KPMG member firm in Italy
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