On 11 December 2015, Italy's Council of Ministers approved for ratification the pending income tax treaty with Barbados. The treaty, signed 24 August 2015, is the first of its kind between the two countries.
The treaty covers Barbados income tax, corporation tax, and petroleum winning operations tax. It covers Italian personal income tax, corporate income tax and the regional tax on productive activities (IRAP).
A maximum rate of 5% is included in Article 10 (Dividends) for the additional taxation of repatriated profits attributed to a permanent establishment.
The following capital gains derived by a resident of one Contracting State may be taxed by the other State:
Gains from the alienation of other property by a resident of a Contracting State may only be taxed by that State.
Both countries generally apply the credit method for the elimination of double taxation.
Article 29 (Miscellaneous Provisions) includes the provision that the benefits of the treaty will not apply if a company is entitled to a tax benefit under a special tax regime in either Contracting State.
The treaty will enter into force once the ratification instruments are exchanged, and will apply from 1 January of the year following its entry into force.
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