Details of the Hong Kong - Italy Income Tax Agreement (2013) (the Treaty), signed on 14 January 2013, have become available. The Treaty was concluded in the English and Italian languages, each text having equal authenticity.
The maximum rates of withholding tax are:
|-||10% on dividends;|
|-||12.5% on interest, subject to exceptions; and|
|-||15% on royalties.|
Deviations from the OECD Model include that:
|-||a building site, a construction, assembly or installation project or supervisory activities in connection therewith, constitutes a permanent establishment only if such site, project or activities continue for a period of more than 6 months (article 5(3)(a));|
|-||the term permanent establishment includes the furnishing of services by an enterprise, through employees or other personnel engaged by the enterprise for such purpose, but only if those services continue, for the same or a connected project, within a contracting party for a period or periods aggregating more than 6 months within any 12-month period (article 5(3)(b));|
|-||article 6 (Income from immovable property) also applies to income from immovable property used for the performance of independent personal services;|
|-||article 10 (Dividends), article 11 (Interest), article 12 (Royalties) and article 21 (Other income) contain anti-avoidance clauses;|
|-||article 13 (Capital gains) also applies to gains from the alienation of movable property pertaining to a fixed base available for the purpose of performing independent personal services; and|
|-||the Treaty contains a separate article on taxation of independent personal services (article 14).|
Both states generally provide for the credit method to avoid double taxation.
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