Brussels, 09/01/2007 (Agence Europe) - On 9 January the European Commission sent a 'reasoned opinion', to Italy over the correct implementation of directive 2003/49/EC on payment of interest and dividends. A second reasoned opinion was sent to Italy to request an end to the application of a withholding tax on the distribution of dividends to parent companies established in the Netherlands. If Italy does not reply satisfactorily to the two reasoned opinions within two months the Commission may refer the matter to the European Court of Justice.
The 2003 directive aims to get rid of interest payments and charges on companies from different Member States in the Member State where these payments come. It also aims to guarantee equal tax treatment between national and cross-border operations. Through a legislative decree transposing the directive, Italy has reduced the scope of the provisions in the directive on interest payments and charges incurred by 1 January 2004 or after this date. Italy is therefore attempting to prevent fraud and tax evasion when interest payments and charges (paid before the entry into force of the directive) are deliberately delayed in an effort to benefit from exonerations included in the directive. The Commission considers that these provisions, which exclude interest and charges paid before 1 January 2004 are disproportionate and go beyond what is necessary in reaching their legitimate objective.
Since 2003 Italy has switched its tax credit system for dividend distributions into an exemption regime. Referring to the jurisprudence of the Italian Supreme Court's (Corte di Cassazione) delivered under the previous credit system, the Italian tax administration refuses to reimburse to Dutch shareholders the 5% withholding tax provided for the Italian-Dutch agreements' provisions on double taxation. The Commission considers that such withholding tax is contrary to the parent-subsidiary directive, which, under certain conditions, exempts from any withholding tax dividends distributed between companies established in different EU member States. (ol)