Law Ratifying China-Italy Tax Treaty Published in Gazette on 3 Dec

Law n. 182 of November 18, 2024, published on the Official Gazette of the Italian Republic on December 3, 2024, ratifies and implements the Agreement between the Government of the People’s Republic of China and the Government of the Republic of Italy for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion, signed in Rome on March 23, 2019.

According to Article 29 of the treaty, its entry into force shall be on the thirtieth day upon the receipt of mutual notification, through diplomatic channels between the two signatory countries, of having completed the necessary internal legal procedures of ratification and implementation, and the Agreement shall have effect to amounts derived on or after the January 1 in the calendar year following that of the entry into force.

The prior tax treaty was signed on October 31, 1986, became effective on November 14, 1989, and has been applicable since January 1, 1990. The new tax treaty was signed on March 23, 2019, with its effective and applicable dates yet to be confirmed.

Regarding dividends, a reduction in the withholding tax rate compared to the 1986 DTA has been introduced, lowering it from 10 to 5 per cent for dividends from investments with a minimum 25 per cent equity stake, resulting in halved taxation on dividends distributed after the new agreement's enforcement.

A reduction to 8 per cent is planned for interest paid to financial institutions for loans with a minimum duration of three years aimed at investment projects, while interest paid to or received from public institutions will be tax-exempt.

For royalties, the new tax treaty maintains a standard rate of 10 per cent, with a reduction to 5 per cent for royalties on industrial, commercial, or scientific equipment.