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15-01-2013 - New tax convention between Italy and Hong Kong

On January 14, 2013 the Double Taxation Convention between Italy and Hong Kong was concluded. As regards the withholding tax on elements of "investment income", the maximum conventional withholding rates are 10% for dividends, 12.5% for interests and 15% on royalties. Unlike most of the treaties concluded by Italy, the Agreement with Hong Kong implements the taxation of capital gains from the sale of shares in non-listed companies operating mainly in real estate also in the Contracting Party where the real estate properties are situated. The exchange of information clause is modeled on the OECD model provision, with some limitations in terms of objective scope (with reference to which, a "most favored nation clause" inserted in the Protocol, would in any case apply). In the Italian perspective, it remains to be verified whether, as it is likely, once the Convention becomes effective, the same will constitute valid basis for the inclusion of Hong Kong in the "white list" and its exclusion from the Italian "black lists" in which Hong Kong is currently included, namely those relevant for the transfer of residence of individuals, the application of the "CFC" legislation and the deductibility of expenses. 


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