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San Marino - Italy Tax Treaty (as amended by 2012 protocol) — Orbitax Tax Hub

Note: This Treaty may be impacted by the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS (MLI). MLI impact on Tax Treaties is available with the Orbitax International Tax Research & Compliance Expert.

*ARTICLE 11

Interest

(1) Interest arising in a Contracting State and paid to a resident of the other Contracting State shall be taxable in that other State.

(2) However, such interest may also be taxed in the Contracting State in which arises and according to the laws of that State, but if the beneficial owner of the interest is a resident of the other Contracting State, the tax so charged shall not exceed:

  • (a) 0 per cent of the gross amount of the interest if the beneficial owner is a company other than a partnership which has held at least 25 per cent of the capital of the company paying the interest for a period of at least 12 months before the date when the interest is paid;
  • (b) 13 per cent of the gross amount of the interests in all other cases.

The competent authorities of the Contracting States shall regulate, by common agreement, the ways to apply such limitations.

(3) Notwithstanding the provisions of paragraph (2) of this Article, the interest derived from one of the Contracting States is tax exempted in that State if:

  • (a) if the payer of the interest is the Government of that said Contracting State or a local authority thereof; or
  • (b) if the interest is paid to the Government of the other Contracting State or a local authority thereof or an
  • institution or body (including financial institutions) belonging entirely to that Contracting State or one of its local authorities; or
  • (c) if the interest is paid, on behalf of the Government, to other institutions or bodies (including financial institutions) in respect of loans granted by them within the framework of agreements concluded between the Governments of the Contracting States.

(4) The term "interest" as used in this Article means income from Government securities, bonds or debentures, whether or not secured by mortgage and whether or not carrying a right to participate in profits, and other debt-claims of every kind as well as all other income assimilated to income from money lent by the taxation law of the State in which the income arises.

(5) The provisions of paragraphs (1) to (3) of this Article shall not apply if the beneficial owner of the interest, being a resident of a Contracting State, carries on business in the other Contracting State in which the interest arises, through a permanent establishment situated therein, or performs in that other State independent personal services from a fixed base situated therein, and the debt-claim in respect of which the interest is paid is effectively connected with such permanent establishment or fixed base. In such a case the interest is taxable in that other Contracting State according to its own law.

(6) Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political or administrative subdivision, a local authority or a resident of that State. Where, however, the person paying the interest, whether he is a resident of a Contracting State or not, has in a Contracting State a permanent establishment or a fixed base in connection with which the indebtedness on which the interest is paid was incurred, and such interest is borne by such permanent establishment or fixed base, then such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.

(7) Where, by reason of a special relationship between the payer and the beneficial owner or between both of them and some other person, the amount of the interest, having regard to the credit for which it is paid, exceeds the amount which would have been agreed upon by the payer and the beneficial owner in the absence of such relationship, the provisions of this Article shall apply only to the last-mentioned amount. In such case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being had to the other provisions of this Convention.