Italy: Provisions For the Role of Withholding Agents in a Foreign Country

June 17, 2021
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The Italian Inland Revenue Agency offers this summary of the provisions concerning the role of withholding agents for a foreign company.

  • Among those required by law to play the role of withholding agent are those entities and companies indicated in Article 87 (now Article 73), Paragraph 1, of the Consolidated Income Tax Act, approved by Presidential Decree of 22nd December 1986, No. and include companies and entities of all types including trusts, with or without legal character, not resident in the territory of the state.
  • Non-resident entities and companies assume the status of withholding agent only for income paid through an established organizational base present in Italy.  Otherwise, or in the absence of an established organizational base in Italy, there is no contributory obligation.
  • A foreign company with no organizational base in Italy is not required to apply withholding taxes on the income paid to its employee in Italy. However, in the event of a withholding obligation, a series of inevitable formal and substantive obligations would then apply.
  • In terms of assessment, the Italian Inland Revenue Agency points out it is important to establish and identify the existence or otherwise of an established organizational base and the performance of activities by employees employed in Italy. In the case that such employees have the power to conclude contractual business on behalf of a foreign employer, the established organizational base would be recognized.


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