Royalties paid by an Italian company to a singer resident in Switzerland should be taxed in Italy with a 5% reduced tax rate according to Agenzia delle Entrate (ruling n. 2020/493) .
The ruling concerned the contractual relationship by an artist resident in Switzerland which has transferred to an italian company the exclusive rights to use phonic reproductions and duplications or the recordings of his performances as a singer. In exchange, the artist receives royalties equal to a certain percentage of the price of the records sold.
In this case Agenzia delle Entrate, complying with a previous interpretation, found that the royalties received by the Swiss artist are also relevant for tax purposes in Italy, but with the application of the more favorable tax regime (withholding tax of 5%) provided for by Article 12, paragraph 2, of the Convention. This more favorable tax regime would apply not only to “copyrights” but also to “neighbouring rights “(such as royalties earned from the public performance of a master recording).