Newsalert - Italian Tax Authorities deny the 11% reduced withholding tax rate on dividends paid to foreign tax transparent vehicles held by EU/EEA pension funds

In Ruling No. 156 of 28 May 2020, the Italian Tax Authorities (“ITA”) provided guidelines on the tax treatment of dividends paid by Italian companies to a UK Authorized Contractual Scheme (“ACS”), entirely held by UK pension funds.

In the Ruling, ITA maintained that the benefit of the 11% WHT rate on dividends provided for EU/EEA pension funds is not available to the ACS; this position could be questioned, insofar as the 11% reduced WHT rate is not incompatible with an application on a look-through basis to the beneficial owner of the dividends.

Further, given that the ACS qualifies as a UCI fully compliant with a harmonized regulatory framework, any WHT levied on dividends paid to an ACS might be questioned also under the perspective of EU law, to the extent that UCIs established in Italy are fully exempt.

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