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Italy: Higher withholding tax rate on dividends paid to nonresidents held discriminatory under TFEU (Supreme Court decision)

Decision no. 4761/2026 of March 3, 2026

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March 16, 2026

The Supreme Court on March 3, 2026, held (decision no. 4761/2026) that the higher withholding tax rate on dividends paid to nonresidents (versus Italian residents) is discriminatory under article 63 of the Treaty on the Functioning of the European Union (TFEU).

The court specifically rejected reliance on “compensatory advantages” (e.g., foreign tax credits or other reliefs in the recipient’s country of residence) to offset the discrimination.

KPMG observation
Nonresidents have a strong position under the court’s decision to claim refunds of withholding tax.

Read a March 2026 report prepared by the member firm in Italy

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