New Countries Eligible for Italy's White List

Tax Law Alert

In the Official Gazette No. 195 of 22 August 2016, the Italian Government published the Ministerial Decree of 9 August 2016 (the "Decree") that amended the list of countries and territories "allowing an adequate exchange of information with the Italian Tax Authorities" contained in the Ministerial Decree of 4 September 1996 (the so-called "White List").

The Decree broadens the White List to include 51 new countries and introduces a new provision giving the Italian Ministry of Economy and Finance the right to remove from the list those countries that are not compliant with exchange of information obligations, in case of repeat violations. In particular, among others, countries such as Switzerland, Hong Kong, Bermuda, Cayman Islands, British Virgin Islands, Jersey e Guernsey have now become whitelisted ([1]).

The new provision allows taxpayers resident in countries previously considered uncooperative (now included in the White List) and investing in the Italian market, the access to certain tax benefits. As an example, under certain conditions, the non-Italian taxpayer resident in a White List country are no longer subject to the following:

  • 26% substitute tax ("imposta sostitutiva") applicable on interest, premium and other income from bonds or similar securities (e.g. minibonds, asset-backed securities including "Law 130" notes) issued by Italian companies in accordance with Legislative Decree No. 239 of 1 April 1996;
  • domestic 26% withholding tax applicable on income from participation in Italian resident collective investment funds;
  • domestic 26% withholding tax applicable on income from participation in Italian real estate funds, if received by foreign pension funds and investment funds established in a White List country.

In many cases, the applicable tax rate in Italy may be reduced to as little as zero.

Please contact us for further information and we would be happy to advise on specific transactions.

([1]) The White List now includes the following countries: Albania, Alderney, Algeria, Anguilla, Argentina, Armenia, Aruba, Australia, Austria, Azerbań≥an, Bangladesh, Belarus, Belgium, Belize, Bermuda, Bosnia and Herzegovina, Brazil, British Virgin Islands, Bulgaria, Cameroon, Canada, Cayman Islands, China, Colombia, Congo Republic, Cook Islands, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Denmark, Ecuador, Egypt, Estonia, Ethiopia, Faroe Islands, Finland, France, Georgia, Germany, Ghana, Gibraltar, Greece, Greenland, Guernsey, Herm, Hong Kong, Hungary, Iceland, India, Indonesia, Ireland, Isle of Man, Israel, Ivory Coast, Japan, Jersey, Jordan, Kazakhstan, Kirghizstan, Kuwait, Latvia, Lebanon, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malaysia, Malta, Mauritius, Mexico, Moldova, Montenegro, Montserrat, Morocco, Mozambique, Netherlands, New Zealand, Nigeria, Norway, Oman, Pakistan, Philippines, Poland, Portugal, Qatar, Romania, Russia, San Marino, Saudi Arabia, Senegal, Serbia, Seychelles, Singapore, Slovak Republic, Slovenia, South Africa, South Korea, Spain, Sri Lanka, St. Maarten, Sweden, Switzerland, Syria, Taiwan, Tajikistan, Tanzania, Thailand, Trinidad and Tobago, Tunisia, Turkey, Turkmenistan, Turks and Caicos Islands, Uganda, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan, Venezuela, Vietnam and Zambia.

Edited by the Italian Tax Team: Alessandro Mainardi, Giovanni Leoni, Camillo Melotti Caccia, and Paolo Tartaglia.