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New Italy - UK tax convention?
Thread poster: Russell Jones

Russell Jones  Identity Verified
United Kingdom
Local time: 08:33
Member (2004)
Italian to English
Oct 19, 2006

An Italian client has just told me they will be deducting an 8% "ritenuta d'acconto" from my bill "in accordance with a recent Italy - UK convention"
Has anyone heard of this please? If so how is it reimbursed?


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Francesca Pesce  Identity Verified
Local time: 09:33
Member (2006)
English to Italian
+ ...
I don't know but... Oct 19, 2006

Try and visit the website of the Italian Ministero delle Finanze (see link below): it contains all the agreements the Italy signed with other countries to avoid double taxation, etc. Most of the agreements themselves are both in English and in Italian. The site seems quite up-to-date, and the agreement stipulated with Great Britain is not at all recent.

I haven't checked in other places.

http://www.finanze.it/export/sites/default/finanze/dipartimentopolitichefiscali/osservatoriointernazionale/convenzioni/index.htm


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RobinB  Identity Verified
Germany
Local time: 09:33
German to English
Double taxation treaty is old Oct 19, 2006

Russell,

The UK/Italy DTT is indeed old, see e.g.

http://www.hmrc.gov.uk/cnr/app_dtt.htm

Without knowing a thing about Italian tax law, I would say that as a rule, cross-border withholding taxes in the EU apply to dividend income, interest income (although that's now covered by the "EU savings tax"), royalties, that sort of thing, and not to business income. And the UK's DTTs themselves generally only deal with that sort of income.

I think there is some sort of withholding tax on professional income in Italy, but that applies of course only to Italian taxpayers, which I presume you are not, unless you are officially tax-resident in Italy.

If I were you, I'd refuse to accept this deduction and demand payment in full (with the appropriate menaces if necessary...) unless they can quote you chapter and verse from this "recent convention".

Robin


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Russell Jones  Identity Verified
United Kingdom
Local time: 08:33
Member (2004)
Italian to English
TOPIC STARTER
Thank you Oct 19, 2006

To Francesca for the link (updated this month), which explains everything.

Robin is right, the 8% the client - a publisher not an agency - wants to withold applies to royalties and other payments for work of an artistic nature.

There is another clause (14) which applies to "professional services or other activities of an independent character", such as "independent scientific, literary, artistic, educational or teaching activities, as well as the independent activities of physicians, lawyers, engineers, architects, dentists and accountants".
Work of this nature is taxable only in the State where the tax-payer is resident (unless he / she has a fixed base regularly available to him / her in the other Contracting State).

Many thanks to both.

Russell


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