International Tax Focus - 8/2025

International Tax News Italy - Monthly update

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The Monthly Update newsletter summarizes the most relevant cross-border tax novelties of July 2025 from a domestic, European and international perspective.

Among the main topics:

- capital gain on sales of real estate companies realized by non residents;

- taxation of foreing-sourced dividends;

- adoption of a Directive on IOSS regime.

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1.Sales of real estate companies shares are relevant in Italy

With their ruling no. 175 of 4 July 2025, the Italian Tax Authorities have clarified that the capital gain derived by a US opaque trust from the sale of shareholdings in a Swiss company whose assets are represented solely by a real estate property located in Italy is subject to tax in Italy.

Indeed, in similar fact patterns, the connecting factors provided for by Art. 23(1-bis) of the TUIR deem the income to be derived from the territory of the Italian State.

2.Proceeds derived from Italian transparent entities are taxable in Italy only if there is a PE

The Italian Tax Authorities, through their ruling no. 186 of 8 July 2025, have analyzed the tax on profits attributed pursuant to a regime of tax transparency to a limited partner resident in Spain (and registered with AIRE) of an Italian limited liability partnership operating exclusively in Italy.

The Italian Tax Authorities confirms that, based on Art. 23 (1)(g) of the TUIR, the income of partnerships attributed for transparency to shareholders (including non-residents) pursuant to Art. 5 of the same TUIR are considered to be derived from the territory of the State. Such income is, therefore, subject to taxation in Italy, with the consequent obligation to declare.

However, even if, under Italian domestic law, such income is considered to be sourced in Italy, taxes might actually be levied in Italy only to the extent that the activity of the Italian limited liability partnership qualifies as a permanent establishment under the tax treaty concluded between Italy and Spain.

3.No capital gain arises in case of transfers of residence where a PE is under the branch exemption regime

According to ruling no. 185 of 8 July 2025:

·       where an Italian tax resident company – which has a permanent establishment abroad to which the Italian branch exemption regime (Art. 168-ter of the TUIR) applies – transfers its tax residence abroad, such transfer does not trigger any Italian tax liability with respect to the assets which are effectively connected to such permanent establishment;

·       the general principle of tax irrelevance of the values of the exempt branch is not, in fact, limited to the sale transactions which it is transferred for consideration, but extends to other implementation transactions, including the transfer abroad of the residence referred to in Art. 166 of the TUIR.

The transfer of the main entity, therefore, may trigger taxable capital gains, determined as the positive difference (if any) between the residual tax value of the assets and liabilities of the main entity and their market value, including goodwill. However, for the purposes of determining such potential capital gain, it is necessary to exclude the values of the assets and liabilities effectively connected to the exempted permanent establishment.

4.Withholding levied are relevant to ascertain fair level of taxation of inbound dividends

Through its ruling no. 191 of 21July 2025, the Italian Tax Authorities have clarified that:

·       in order for foreign-sourced dividends not to be considered as black listed dividends, the criteria established by Art. 47-bis of the TUIR (level of the effective tax rate or nominal tax rate) must be met both in the year in which profits accrued and in the year in which they are distributed;

·       in the event that the test fails, dividends can still benefit from the Italian dividend exemption regime (i.e. taxation of 5% of the dividends received) if the so-called “second exemption” (being that the income derived by an Italian resident should not be considered as localized in a black-listed Country) is met. In order to check whether the dividend received were actually subject to a fair level of taxation, one has also to consider any withholding levied by the foreign Countries from which the dividends have been paid.

5.The centre of vital interest under tax treaty prevails on the AIRE registration

The decision issued by the Italian Supreme Court no. 19459 of 15 July 2025 established that, where an individual has maintained his/her registration in the registry of the Italian population residing abroad (so called AIRE) but has his/her center of vital interests in another State, he/she must be considered resident in that other State.

Indeed, the provisions of the tax treaty with the other State (in the case of decision, Spain) prevails over Italian domestic law pursuant to, among the others, Art. 117 of the Italian Constitution.

6.VAT margin scheme does not apply to phones re-imported from a Third Country

The Italian Supreme Court, with its decision no. 19102 of 11 July 2025, excluded the applicability of the VAT margin regime on the sale of used mobile phones that had first been sent to China to be regenerated and then had been imported into an EU member state (Belgium) to be finally released for consumption in Italy.

In the specific case, according to the Italian Supreme Court, the subjective condition for the application of the special regime, which provides that the used goods subject to resale have been purchased from a private individual (or in conditions “assimilated” to the purchase from a private individual) in the territory of the State or in another EU State, was not met.

In the case examined, the goods come from a non-EU country and the fact that they have been imported and that they arrived in Italy not from China but from Belgium does not change the outcome.

7.The EU Council adopts a Directive on IOSS

The EU Council, in its meeting of 18 July 2025, formally adopted the directive which, effective 1 July 2028, introduces new VAT rules aimed at incentivizing the use of the special IOSS (Import One Stop Shop) scheme, in order to make the collection of tax on distance sales of imported goods more effective.

The scheme allows to register in a single Member State to declare and pay the VAT due in relation to distance sales of imported goods, with a value not exceeding Euro 150, made in all Member States.

By amending Directive 2006/112/EC, the new provisions provide that suppliers who make sales falling within the scope of the IOSS, without being registered under the special scheme, normally become liable for import VAT and VAT on distance sales in the Member States of final destination of the goods, with the consequent obligation to register for VAT in each of those States.

The directive will now have to be published in the Official Journal of the European Union to enter into force.

8.USA and EU reach an agreement on import duties

On 27 July 2025, a framework agreement was reached between the President of the United States of America and the President of the European Union on the application, as of 1 August 2025, of duties on most products of EU origin that will be imported into the United States.

According to the European Commission, this rate would apply to most sectors, including automobiles, semiconductors and pharmaceuticals.

The generalized rate of 15% should not be on top of the import duty rates that are provided for in the United States, for each category of products, because of the tariff classification that distinguishes them.