Dividend tax, here's how to submit refund claims to the Inland Revenue Agency

The jurisprudential pronouncements of the Tax Courts of Verona (No. 423/2023) and Siena (No. 68/2024) have opened the door to the submission of refund applications to the Inland Revenue Agency, for all dividends and coupons received by investors who have suffered double taxation of dividends or interest: a first taxation abroad through the application of the withholding tax in the foreign country and a subsequent taxation in Italy through withholding and/or substitute tax.

"Reimbursement petitions to the Revenue Agency," explains Riccardo Di Stefano, associate partner of Kpmg Private Italia, "based on our experience, end with a tacit denial by the Revenue Agency, but they are the starting point to be able to start the subsequent litigation phase at the Tax Courts. Only after the denial and, in any case, after the expiration of the terms within which the Inland Revenue could provide a response - after 90 days, the lack of response represents a silent denial - will it be possible to start with the appeal to the Tax Court in order to be able to see the refund due, which, given the consolidation of the jurisprudential orientation, should conclude with the involvement of the Courts of Merit".

Each petition may be submitted with reference to a maximum time span of the previous four years. "After the presentation of the first petition legitimising the request for reimbursement on dividends and/or coupons," continues Di Stefano, "it will be possible to proceed with the request for reimbursement with reference to each single year. The fundamental element that legitimises the reimbursement request is represented by the finality of the tax paid abroad, i.e. the clear proof that the foreign withholding tax has actually been applied, such as the declaration of the foreign bank certifying the withholding tax applied, or a document issued by the foreign tax administration certifying the taxes paid'. Finding such documentation may be the most delicate phase of the proceedings.

The refund may be requested both by taxpayers under the declaratory regime (including those with direct holdings of foreign shares) and by taxpayers under the administered savings regime with a securities deposit account with an Italian intermediary. 'In order to prevent any subsequent requests for further investigation by the Revenue Agency,' adds Di Stefano, 'from a procedural point of view, it will also be advisable to reconstruct the declared income data and the indication of the income elements for which the refund will be requested.

On the other hand, with regard to the request for reimbursement to the foreign tax authorities, it is possible to submit the request provided that a convention against double taxation is in force between Italy and the source country of the dividend (there are 100 agreements in force) and a local withholding tax of the foreign State higher than that provided for by the convention has been applied.