News Share

The Tax Hub

Daily Tax Newsletter

European Union- Italy

24 February 2007

Responsive image

EU Commission requests Italy to implement the Interest and Royalties Directive correctly

On 9 January 2007, the European Commission announced that it had sent Italy a formal request to implement the Interest and Royalties Directive (Council Directive 2003/49/EC of June 2003) (the Directive) correctly (case reference number 2006/4136).

The Directive aims to abolish the taxation of interest and royalty payments made between associated companies of different Member States in the Member State of source and thereby to ensure the equal tax treatment of domestic and cross-border transactions.

Italy implemented the Directive by legislative Decree No. 143/2005 and restricted its scope of application to interest and royalty payments accrued (having become payable) on or after 1 January 2004. This restriction intended to prevent fraud and tax evasion that takes the form of intentionally delaying payments, which had become payable before the entry into force of the Directive, in order to benefit from the exemption under the Directive.

The Commission considers that the Italian provisions, which exclude from the benefit of the Directive any interest and royalty payment which became payable before 1 January 2004, are disproportionate and go beyond what is necessary to achieve their legitimate purpose. The Commission rejected the Italian government's justification that referred to the limited impact of the provisions.

The request is in the form of a reasoned opinion, which is the second stage of the infringement procedure under Art. 226 of the EC Treaty. If Italy does not reply satisfactorily to the reasoned opinion within 2 months, the Commission may refer the matter to the European Court of Justice (ECJ).

Powerful Tax Tools


FX Rates

Global FX Rates including Tax Year Average FX Rates and Spot Rates for all Reporting Currencies.


Corporate Tax Rates

Corporate tax rates, surtaxes, and effective tax rates for the current year, as well as historical rates and approved future rates.


Country Analysis

Detailed tax guidance for companies doing business in over 100 countries, including summaries and snapshots of key tax facts and issues.


Cross Border Tax Calculator

Calculate total tax costs and benefits of a cross border transaction including withholding tax, participation exemption and foreign tax credit rules.


Cross Border Tax Rates

Provides Domestic, treaty and EU cross border tax rates for over 5,000 country combinations for 9 different payment streams.



Complete overview of the OECD BEPS Project, including daily BEPS news, country adoption of BEPS measures, and an overview of the 15 BEPS Actions.


Tax Calendar

Customizable calendar tool that tracks corporate income tax, value added tax and transfer pricing obligations by country or entity.


Tax Forms

English translations of key tax forms for over 80 countries, including tax return forms, treaty benefit forms, withholding tax forms, and more.


Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.


Worldwide Tax Planner

Calculates the worldwide tax cost of what-if scenarios based on legal entity structure, taxable income, and cross border transactions.


Certified Rates Report

Customizable Certified Rates Report providing updated corporate and withholding tax rates at the end of each month for over 100 countries.


Withholding Tax Minimizer

Enables quick calculation of tax costs and benefits of cross border transactions considering all possible transaction combinations and optimal routes.


VAT Rates

Provides value added tax (VAT) rates, goods and services tax (GST) rates and other indirect tax rates for over 100 countries.


NOL Calculator

Country specific calculator to determine how net operating losses can be utilized in carryback and carryforward years.


Transfer Pricing Calculator

Calculates TP ratios under various TP methods and calculates the difference between target ratios and actual ratios.


Individual Income Tax Rates

Individual tax rates for over 100 countries.

Play of the Day

Worldwide Tax Treaties

Repository including thousands of tax treaties (in English), OECD, UN and US Models, relevant EU Directives, Technical Explanations, and more.

We’re here to help

We’re here to answer any questions you have about the Orbitax products and services.

Send us a message

Who’s behind Orbitax?

We’re committed to providing high value, low cost tax research and management solutions.

Learn More