Italy: Summary Of New Legislation In Italy

Last Updated: 13 December 1999

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.

The main provisions include:

(1) Dividends: If the recipient of the dividend is the beneficial owner, the new withholding tax rates apply as follows: 5% of the gross amount of the dividend is withheld if the recipient is a company which owns at least 25% (50% under the preceding tax treaty) of the voting stock of the payor company for a twelve-month period ending on the date the dividend is declared. A 15% withholding tax broadly applies in all other circumstances.

The Branch Profit Tax applies on a 5% tax-rate basis as an add-on to the ordinary corporate income tax of the branch which resides in the US or Italy (currently, only the US has laid down specific legislation on the Branch Profit Tax).

(2) Interest: The new withholding tax equal to 10% of the interest to be paid (15% under the preceding tax treaty) applies under general conditions to the extent that the interest does not exceed the fair market value of the transaction. Otherwise, either taxation on re-characterised income or, in its absence, domestic legislation on withholding tax on interest will apply.

(3) Royalties: If the recipient is the beneficial owner of the royalties, the source-country withholding tax generally may not exceed 8% of the gross income. A 5% withholding tax limitation applies to royalties for the use of (or the right to use) computer software or industrial, commercial, or scientific equipment. A total exemption applies for the use (or right to use) of a copyright of literature, artistic, or scientific work, provided that it does not derive from computer software, motion pictures, films, tapes, or other means of reproduction used for radio or television broadcasting. The text of the new treaty can be found at in the section US-Italy News.

CODE OF CONDUCT FOR LISTED COMPANIES. The Committee for the Corporate Governance of Listed Companies has drafted a Code of Conduct for Listed Companies. The Code, which is voluntary and not mandatory, sets out some principles to which listed companies should conform. The Committee considered self-regulation of listed companies as the best way to avoid binding rules which might limit the company’s organizational options, while reassuring investors that listed companies comply with the best practice standards.

Various aspects of corporate governance are tackled by the Code, such as the following:

Role of the Board of Directors: the main responsibility of the Board of Directors is to set the company’s strategic goals and to pursue their achievement. Directors should be well informed about the facts, should make independent decisions and should seek to create value for the shareholders.

Composition of the Board of Directors: the members of the Board of Directors should be executive directors (i.e. hold managing positions within the company), as well as non-executive directors. A fair number of non-executive directors should be independent, and therefore should not maintain any business relationship with the company, its shareholders, its subsidiaries or its executive directors which impairs their independence, nor should they own a quantity of shares which enables them to control the company.

Information to be provided to the Board of Directors: the executive committee and the managing directors should inform the Board of Directors of all relevant or unusual transactions.

Confidential information: all confidential information received by the Board of Directors, and especially price-sensitive information, should be carefully handled by directors according to specific internal procedures to be adopted.

Appointment of directors: appointment of directors should follow a careful evaluation of the character and professional qualifications of the candidates.

Remuneration Committee: the issue of remuneration of directors should be dealt with by a remuneration committee within the Board of Directors, which may employ external consultants.

Internal Control Committee: the managing directors should define internal procedures and an internal-control system in order to check compliance with such procedures. An internal-control committee should be established within the Board of Directors to supervise the internal-control system.

Relations with Institutional Investors and Other Shareholders: the Chairman of the Board of Directors, as well as the managing directors, should develop a dialogue with the Shareholders, possibly by establishing a specific body entrusted with this function.

Shareholders’ meetings: attendance at shareholders’ meetings should be encouraged and the meeting should be conducted in an orderly fashion to enable Shareholders to address all matters on the agenda.

Members of the Board of Auditors: appointment of auditors should follow a careful evaluation of the character and professional qualifications of the candidates. Auditors should be independent and should comply with procedures protecting the confidentiality of information.

The Code of Conduct can be found at


To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions