With the reply to question 57, the Italian Revenue Agency has returned to the taxation of dividends paid to foreign controlling entities. In particular the Agency analyzed the distribution of intragroup dividends in the event that the recipient is a company belonging to the Swiss Confederation.
The document of practice recalls that, pursuant to the agreement signed between the European Union and Switzerland on 26 October 2004, a specific exemption has been provided for the application of the 27% withholding tax based on Article 27, paragraph 3 of the DPR 600 / 73. Indeed, pursuant to Article 15 (1) of the Agreement, which entered into force on 1 July 2005, the dividends paid by the subsidiaries to the parent companies are not subject to taxation in the State of origin, when several are satisfied:
– the parent company directly holds at least 25% of the capital of the daughter company for a minimum of two years;
– one of the two companies has tax residence in one Member State and the other has a tax residence in Switzerland;
– neither company has tax residence in a third State on the basis of an agreement on double taxation with that third State;
– both companies are subject to direct tax on company profits without benefiting from exemptions and both take the form of a capital company.
Lastly, it is important to underline that, according to the resolution of the Revenue Agency n. 93/E/2007, the companies belonging to the Swiss Confederation, in order to benefit from the particular mother-daughter regime, can not enjoy or apply provision of law, nor as a result of administrative measures, of special facilitating schemes, which result in exemption from one of the three levels of direct taxation (federal, cantonal and municipal).
In the case examined, Beta SA had formally waived, since the 2017 tax period, the regime of “holding companies resident in Switzerland”, which provides for exemption from cantonal and municipal taxes. In addition, dividends were intended to be distributed by Alfa to the Beta SA company only in 2019, thus causing them to be subject to the ordinary tax regime in force in the Swiss Confederation.
On this point, it should be noted that the so-called “reduction for equity investments” (a sort of participation exemption regime) cannot in any way be considered a favorable tax regime.
In light of the above, the Revenue Agency has given a favorable opinion regarding the exemption from the application of the 27% withholding tax, considering the behavior of the company in line with the dictates of the agreement between the European Union and Switzerland.
