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06-12-2019 - Exemption of dividends distributed by a German company

The Italian Supreme Court, with decision n. 29635 dated 11.14.2019 and n. 30140 dated 11.20.2019, stated that the dividends distributed by a person resident in Germany to the shareholder resident in Italy are fully exempt and should not be subject to 5% taxation pursuant to art. 89, of Presidential Decree 917/1986. 
This is due to the fact that the Italy-Germany Double Tax Treaty provides, with art. 24, par. 2, lett. b), the exemption from the Italian taxable base for dividends paid by a company (other than a partnership) resident in Germany whose share capital is held for at least 25% by the Italian shareholder receiving the dividends. 
Therefore, the Supreme Court stated that the exclusion from the tax base laid down in the aforementioned Double Tax Treaty prevails over the taxation of 5% of the dividends distributed to the Italian shareholder. 
It should be noted that the principle established by the Supreme Court could also be applied with reference to the Italy-Brazil Double Tax Treaty. 


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