Double Taxation Agreement Italy China

7 December 2020, 10:18 | Uncategorized | Commenti: 0

Article 10 of the new DBA concerns the taxation of dividends. It is expected that holders receiving at least 25% of the company`s capital are qualified for a 5% tax rate for a minimum period of one year. Compared to the existing DBA rules of 1986, which stipulate that the tax collected must not be higher than the gross amount of dividends of 10%, the rate can be reduced by 5%, which is a benefit for Italian companies that receive dividends from Chinese sources, as well as incentives to capitalisation Chinese companies in Italy using the average value of the shares. In addition, the one-year period includes the date on which the dividend was paid and, in terms of the purpose of calculating that period, changes of ownership resulting directly from a restructuring of the business, such as. B the merger or demerger of the company holding the shares or dividends, are not taken into account. 3. Interests This new DBA is likely to take a few years to be ratified and enter into force. Looking at, for example, the recent experience of France and Germany, the new DBA between China and France, signed in November 2013, was ratified a year later and came into force in January 2015; in the case of Germany, the Double Taxation Convention was signed in March 2014, ratified in April 2016 and came into force in January 2017. The new agreement signed in Rome to avoid double taxation and prevent tax evasion will give an advantage to trade activities between China and Italy.

However, the agreement introduces a tax reduction that may apply to royalties arising from the use or right to use commercial, commercial or scientific equipment. This means that the 1986 DBA sets a withholding tax of 10% to 70% of the gross royalty amount, resulting in a tax rate of 7%, while the new version sets the application of the tax only on the 50% of the gross amount, resulting in an effective rate of 5%: a more advantageous term has been set. Unlike most of Italy`s double taxation agreements, the agreement applies only to income taxes (including capital income taxes) and not to capital taxes. The new DBA confirms that capital gains from the disposal of a portfolio of qualified holdings of at least 25% are taxable, but that a new provision is introduced: the taxation of capital income is only permitted if the aforementioned participation threshold has been maintained at any time in the twelve months prior to the sale. Etichette: AccordBEPSdividensDouble TaxDTAoecdroyalties Tax Agreement The most notable changes to the agreement are in the areas of taxation of dividends, interest and royalties as well as capital income. Italian investors in China should be aware of changes in the planning and optimization of their new tax liabilities. In addition, the tax on royalties related to the right or right to use commercial, commercial and scientific equipment will be subject to a reduced rate of five per cent, up from seven per cent previously. This gives Italy preferential treatment compared to other European countries that have double taxation agreements with China, which are generally subject to a tax rate of at least 6% on royalties. Read more: New China-Italy Double Taxation Conventions While the previous DBA has broken many of the barriers to cross-border trade, investment and knowledge exchange between the two countries, this revised agreement is ready to provide even more favourable terms for Chinese and Italian investors if they do business.

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