Dividends paid by an Italian subsidiary admitted to the cooperative compliance regime may be exempt from withholding tax even if distributed before the minimum holding period is met

The Italian Revenue Agency, in its Tax Ruling no. 48/2025, has provided important clarification regarding the application of the exemption from withholding tax on dividends paid by the Italian companies to the EU parent companies, in the absence of the one-year “holding period” requirement provided by Article 27-bis of Presidential Decree No. 600/1973.

The case under examination has involved an Italian company, (hereinafter "Alpha" or, also, “the taxpayer”) subject to the “cooperative compliance” regime provided by Legislative Decree no. 128 published on 5 August 2015, and its Dutch Parent company, (hereinafter “Beta”).

The taxpayer has clarified that it would distribute a dividend to its Dutch Parent company, applying the exemption for dividends according to the EU Parent-Subsidiary Directive. The taxpayer asked, to the Italian Revenue Agency, whether it was possible to apply the favourable exemption regime on dividends provided for by the EU Parent-Subsidiary Directive even though the company receiving the dividends had not yet completed the one-year holding period required by the law.

The Article 27-bis of Presidential Decree No. 600/1973 provides an exemption from the withholding tax on dividends paid by a company resident in Italy to an EU parent company, may be granted on condition that the company receiving the dividends:

holds at least 10% of the capital of the company paying the dividend;
is resident, for tax purposes, in an EU Member State;
has one of the legal forms required by the EU Parent-Subsidiary Directive;
is subject to a corporate income tax without subject to any exemption; and
holds the shareholding for at least one year.

“Green light” by the Italian Revenue Agency.

The Italian tax authority has confirmed what had already been clarified in the previous tax ruling No. 537/2021. More in particular, it has been explained that the EU “parent-subsidiary” exemption can be applied even if the holding period requirement is not already met, (as long as the requirement is subsequently met) when the company payer is subject to the Italian cooperative compliance regime.

The Revenue Agency clarification is an important opportunity for those companies subject to the cooperative compliance regime. On the other hand, all other companies that do not apply this regime will still have to respect this requirement in order to subject to the exemption provided by the EU “parent-subsidiary” Directive.

Furthermore, it can be seen that compliance with the cooperative compliance regime allows for a structured dialogue with the tax authorities, enabling taxpayers to anticipate critical issues and receive timely responses. This mechanism not only improves tax compliance but also reduces the risk of litigation by providing a clearer and more predictable legal framework.

The Revenue Agency's decision to apply the advance exemption reinforces the role of the cooperative compliance regime as an effective tool for tax simplification and transparency. Another aspect to consider is the potential impact of this interpretation on the attractiveness of Italy for foreign investors. The possibility of obtaining an immediate exemption from withholding tax on dividends increases the competitiveness of Italian companies in the European market.

This could encourage multinational groups to reorganize their holding companies in Italy, taking advantage of a clearer and more predictable tax regime. However, it is essential that companies wishing to benefit from this exemption fully comply with the reporting requirements and actively cooperate with the Revenue Agency to ensure full transparency.