Italy: Late submission of tax residence certificate does not preclude parent-subsidiary directive withholding tax exemption
Concerning applicability of the parent-subsidiary directive (PSD) withholding tax exemption on outbound dividends
The Italian Supreme Court on May 7, 2026, held that the late submission of a tax residence certificate does not preclude the applicability of the parent-subsidiary directive (PSD) withholding tax exemption on outbound dividends.
The case concerned dividends paid in the 2007 tax year by an Italian company to its Danish parent. The Italian tax authorities denied the withholding tax exemption and assessed additional tax liabilities and penalties on the grounds that the Danish residence certificate required to apply the PSD exemption had been issued only after the dividends were paid.
The Supreme Court rejected the position of the tax authorities, reaffirming its earlier case law that the residence certificate is a formal requirement intended to protect the paying subsidiary when granting the exemption. In the Supreme Court’s view, when the substantive conditions of the PSD are satisfied, the late issuance or production of the certificate does not justify denying the exemption. Accordingly, the Supreme Court upheld the lower court’s decision annulling the assessment and related penalties, stressing that the exemption remains available unless the tax authorities can demonstrate that the substantive conditions for the regime were not met.
Read a June 2026 report prepared by KPMG’s EU Tax Centre