Italy: The new Italian ‘White List’ – tax opportunities for foreign investors

International Tax Review is part of Legal Benchmarking Limited, 1-2 Paris Garden, London, SE1 8ND

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Italy: The new Italian ‘White List’ – tax opportunities for foreign investors

Florence dome 100 x 90

The Italian government updated the so-called "White List" to include a number of jurisdictions that were previously deemed uncooperative.

serbini.jpg
gonzato.jpg

Stefano
Serbini

Alessandro
Gonzato

The White List, updated on August 9 2016, enumerates the countries that agree to exchange financial information for tax purposes with Italy and has 123 countries (the original version had around 70 jurisdictions).

The increasing trend of "cooperative countries" represents a significant step towards transparency in international tax matters, mostly considering the involvement of several former "tax havens" (e.g. Hong Kong, Channel Islands, Cayman Islands, British Virgin Islands, Seychelles).

The inclusion of such countries is mainly due to their adhesion to the OECD multilateral agreement on the automatic exchange of information and to the bilateral agreements signed as a consequence of the Italian voluntary disclosure procedure.

The government has retained the right to control the effectiveness of the exchange of information with the above mentioned countries and to delete any countries from the White List that commit repeated violations.

Various provisions of law, directly and indirectly, make reference to the White List and some even grant a favourable tax regime to different kinds of financial income realised by persons resident in the referenced countries.

The new White List allows investors resident in countries that were previously deemed to be not cooperative to join the above mentioned favourable tax regime and therefore may allow foreign financial players to access the Italian market and, vice versa, to facilitate Italian companies to find new financial sources.

For example, investors resident in countries included in the new White List will be admitted to invest both in Italian government bonds and bonds issued by Italian private entities (e.g. banks, industrial and trading companies), under certain conditions, without incurring any taxation at source on interest and other income payable on such instruments (according to Article 6 of Legislative Decree No. 239/1996).

Such investors will also be entitled to invest in Italian collective funds and 'Sicav' or enter into financial transactions such as securities lending and repurchasing agreements with Italian counterparties without being subject to any withholding tax on the related income (according to Article 26-quinquies and Article 26-bis of Presidential Decree No. 600/1973).

Even more important is the opportunity provided for by Article 26, paragraph 5-bis of Presidential Decree No. 600/1973. This provision grants the withholding tax exemption on interest payable by Italian borrowers to foreign lenders on medium-long term loans (i.e. loans with a duration of more than 18 months).

The exemption is granted to EU banks, financial institutions and insurance companies and also to "foreign institutional investors", even with no tax status, resident or established in a White List country and subject to their supervisory authorities.

According to this provision, the Saudi Arabia sovereign fund (a country now included in the new White List), as well as private institutional investors resident in White List countries, may grant medium-long term loans to Italian borrowers, under specific conditions and restrictions, without being subject to (withholding) taxation at source.

Such entities are entitled to the above favourable tax regime irrespective of their tax status in the home country, i.e. even if they are not subject in the residence country to (corporate or other) tax on the interest paid by the Italian borrowers.

By contrast, should such entities be controlled by Italian persons, Italian CFC rules could become applicable and therefore the income realised by them would be subject to taxation in Italy if, in essence:

  • The corporate income statutory tax rate in the residence country of the foreign entity is lower than 50% of the Italian statutory rate; or

  • The effective tax rate applicable in the foreign country is lower than 50% of the applicable Italian tax rate and more than 50% of the foreign entity's revenues have a "passive income" nature.

Stefano Serbini (stefano.serbini@belluzzo.net) and Alessandro Gonzato (alessandro.gonzato@belluzzo.net)

Belluzzo & Partners

Tel. +39 02 36569657

Website: www.belluzzo.net

more across site & shared bottom lb ros

More from across our site

Canadian Prime Minister Mark Carney and US President Donald Trump have agreed that the countries will look to conclude a deal by July 21, 2025
The firm’s lack of transparency regarding its tax leaks scandal should see the ban extended beyond June 30, senators Deborah O’Neill and Barbara Pocock tell ITR
Despite posing significant administrative hurdles, digital services taxes remain ‘the best way forward’ for emerging economies, says Neil Kelley, COO of Ascoria
A ‘joint understanding’ among G7 countries that ‘defends American interests’ is set to be announced, Scott Bessent claimed
The ‘big four’ firm’s inaugural annual report unveiled a sharp drop in profits for 2024; in other news, Baker McKenzie and Perkins Coie expanded their US tax benches
Representatives from the two countries focused on TP as they met this week to evaluate progress under a previously signed agreement – it is understood
The UK accountancy firm’s transfer pricing lead tells ITR about his expat lifestyle, taking risks, and what makes tax cool
Dolphin Drilling intends to discuss the final liability amount and manner of settlement with HM Revenue and Customs
Winning the case against the 20% VAT imposition was always going to be an uphill challenge for the claimants, UK tax advisers argue
A ‘paradigm shift’ in Chile’s tax enforcement requires compliance architecture built on proactive governance, strategic documentation and active monitoring of judicial developments
Gift this article