A NEWSLETTER prepared by Graham & James LLP, Milan Office
November, 1999
NEW DOUBLE TAXATION TREATY BETWEEN ITALY AND THE US.
On August 25, 1999 Italy and the United States signed a new Double Taxation Treaty in Washington. Among other concerns, the new treaty is meant to recognise the recently adopted Italian Tax on Regional Productive Activities (IRAP) for US/ITA double-taxation purposes. Specifically, only a portion of the IRAP paid by US entrepreneurs in Italy, based on a certain formula, will be credited against US taxes. The new treaty has provided the partners with the opportunity to reconsider provisions regarding tax avoidance aspects by adopting US anti-treaty shopping tests. The new treaty will become effective when the two countries exchange the ratification instruments.
