The Double Taxation Agreement between Italy and the United Kingdom: A Comprehensive Overview
Taxation is a crucial aspect of any country`s revenue collection, and it is always a vital issue in international trade and commerce. To avoid double taxation, many countries have signed bilateral tax treaties with each other. One such agreement is the Double Taxation Agreement (DTA) between Italy and the United Kingdom (UK). The agreement is an effort to promote cross-border trade, investment, and other economic activities between the two countries.
The DTA between Italy and the UK was signed in London on December 17, 1986, and came into force on July 30, 1987. The agreement has been amended several times, with the latest protocol signed on October 23, 2018, which has been in effect since January 1, 2020.
The DTA covers various types of taxes in both countries, including income tax, corporation tax, capital gains tax, and dividend tax. It also provides for the exchange of information and assistance between the two countries` tax authorities to prevent tax evasion.
Under the DTA, taxes on income, profits, or gains arising in one country are typically credited against the tax payable in the other country. This means that residents of either country will not have to pay taxes twice on the same income. The agreement also provides for tax relief for certain activities, such as shipping and aviation profits, artists and sportsmen`s income, and pensions.
In addition, the DTA also includes an article on the “Elimination of Double Taxation on Dividend Payments.” This article ensures that dividends paid by a company resident in one country to a resident of the other country are not subject to double taxation. The agreement also sets a maximum withholding tax rate of 15% on dividends paid to non-resident shareholders.
The DTA also covers the taxation of capital gains. Under the agreement, gains made from the sale of immovable property are taxed in the country where the property is located. For other types of assets, the gains are taxable in the country where the seller is a resident.
In conclusion, the Double Taxation Agreement between Italy and the UK is a vital tool for promoting cross-border trade and investment between the two countries. It provides much-needed clarity and certainty to businesses and individuals engaging in cross-border activities. With the latest protocol signed in 2018, the agreement is up-to-date and relevant in today`s global economy. This agreement is a model of cooperation between nations to ensure fair and equitable taxation and business practices that benefit both parties involved.