This blog clarifies the recent Italian Supreme Court rulings on, among other requirements, the effect of participation exemption regimes in the EU. These rulings deal with the exemption of withholding tax (“WHT”) on dividends in Italy, based on: the EU Parent-Subsidiary Directive, Italian bilateral tax treaties (“DTAAs”) and the participation exemption regimes applied in the resident state of the recipient of the dividends. In this regard, cases with a focus on Dutch and Luxembourg holding companies and their respective participation exemption regimes have been selected. These regimes are relatively generic in nature and should, if the requirements of the participation regimes be met, exempt dividends.
