Recognition of double tax treaty benefits to Passive Holding

Passive Holding that hold share in operative company are often considered legal structure to avoid to pay a withholding tax on income produce locally.

The Italian Tax Authorities has always considered that the passive holding do not apply the double tax treaty benefits, considering the same as an interposed structure and not beneficiary owner of the income produced.

Instead, recently, the Italian judgment has specified that the absence of any operational activity on its own can not be decisive element to determine if the person is or not beneficiary owner of dividends.

For these reasons the use of a passive holding does not preclude the application of double –tax treaty.

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