Tax Law – Withholding taxes on interest paid to a foreign affiliated company – Interest and Royalties Directive and Double Taxation Treaties. Cassazione, tax section, Ruling of 6.11.2023 no 30900.

The Supreme Court (https://www.mattarelli.eu/wp-content/uploads/2023/11/Sentenza-Cass-sez-trib-30900-2023-1.pdf ) intervenes in the judgment on the refund (for exemption under art. 26-quater of d.p.r. n. 600/1973, implementing the Interest and Royalties Directive) of taxes withheld under art. 26 of d.p.r. n. 600/1973 on interest paid by an Italian company to a Dutch foreign affiliated company. With regard to the provision of art. 26-quater, c. 3, n. 5, which states that the exemption does not apply to “payments relating to credits that do not contain provisions for the repayment of the capital or for which the repayment must be made after more than fifty years from the date of issue”, the Supreme Court states that this condition does not apply when – as in the case at hand – the financing agreement, although without a term, contains a provision upon which the repayment of the capital must take place at the first request of the lender. The judgment then states that the fact that the request for reimbursement under the Double Taxation Treaty is proposed for the first time in the appeal (and not in the original request) does not constitute a modification of the petitum, as it is only the same request substantiated by a different provision equally aimed at eliminating double taxation. Finally, the Court consolidates the principle that conventional benefits do not require proof of the actual subjection of the income in the country of the recipient, but rather the attestation of the foreign authority that gives account of the fact that it is subject to income tax without benefiting from exemption regimes.