The dividend tax in Italy increased by 26% starting on July 2014 and the new rate applies to all the dividends received after 1st July 2014, according to the Decree Law 66. This measure is part of a set of changes taken by the Italian authorities in order to relaunch the local economy, affected by the crises. The Italian Government decided to change also the taxation of other types of income, such as interest and capital gains, and reduce the regional corporate tax (IRAP). These measures were expected to be part of a law approved by the Parliament.
The old rate for dividend tax was 20% and the new rate – 26% - is applicable for other types of income taxes too, such as on interests, capital gains etc. The exceptions are interests and capital gains on Italian Government bonds for which it is applied a different rate – 12,5%.
The companies from the European Union that receive dividends from Italy can benefit from a reduced rate of dividend tax or they can be exempt from paying. In order to benefit from the exemption, the company should hold minimum 10% of the subsidiary for minimum one year.
The dividend tax must be paid by all entities who receive dividends from Italy. The non-resident companies are taxed differently from the resident companies.
The rate of 26% is applicable for loan interest, capital gains, dividends, interest on bonds obtained from Italy.
Companies that perform economic activities in Italy have to pay also the corporate tax, at a rate of 31.4%. The values of the rates decreased in the last years and that’s why Italy has become an attractive destination for foreign investments. In the corporate tax are included IRES (27.5%) and IRAP (3.9%). The rates for these two components of the corporate tax are different according to the type of activity performed by a company and to the region where the activity is performed.
If you need more information about the dividend tax you have to pay in Italy and other taxes imposed by the Italian authorities, you may contact our Italian lawyers. Our law firm in Italy provides tax advice services and help foreign investors open companies and obtain special permits and licenses for their businesses.
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