Double Tax Treaty between Luxembourg & Italy

Convention
between Luxembourg and Italy for the avoidance of double taxation with respect to 
taxes on income and on capital and to prevent tax evasion and avoidance

 

His Royal Highness the Grand Duke of Luxembourg and The President of the Italian Republic, desiring to conclude a Convention for the avoidance of double taxation with respect to taxes on income and on capital taxes and for the prevention of fiscal fraud and evasion, have agreed upon the following provisions the following provisions:

Article 1

PERSONS COVERED

This Convention shall apply to persons who are residents of one or both Contracting States. of each of the two States.

Article 2

TAXES REFERRED TO

  1. This Convention shall apply to taxes on income and on capital imposed on behalf of each of the Contracting States, of its political or administrative subdivisions and of its local authorities, irrespective of the system of taxation.
  1. The following shall be considered as taxes on income and on capital: taxes imposed on total income Taxes on income and wealth are taxes on total income, total wealth, or on items of income or wealth, including taxes on gains from the alienation of movable or immovable property, taxes on the total amount of wages paid by businesses, as well as taxes on capital gains.
  1. The existing taxes to which the Convention shall apply include:

(a) in the case of Italy:

(1) the personal income tax (imposta sul reddito delle persone fisiche) ;

(2) the tax on the income of legal persons (imposta sul reddito delle persone giuridiche) ;

(3) local income tax (imposta locale sui redditi) even if these taxes are levied by means of withholding tax

(hereinafter referred to as “Italian tax”

(b) in the case of Luxembourg:

(1) the personal income tax ;

(2) the tax on the income of communities;

(3) the special tax on directors’ fees

(4) wealth tax;

(5) municipal business tax on the basis of operating profit and capital

(6) the municipal tax on total wages even if these taxes are levied by way of withholding tax

(hereinafter referred to as “Luxembourg tax”).

  1. The Convention shall apply also to any future taxes of an identical or substantially similar character imposed after the date of signature of this Convention in addition to, or in place of, the taxes referred to in paragraph 3. The competent authorities of the Contracting States shall notify each other of any substantial changes which have been made in their respective taxation laws.

 

Article 3

GENERAL DEFINITIONS

  1. For the purposes of this Convention, unless the context otherwise requires

(a) the term “Luxembourg” means the Grand Duchy of Luxembourg ;

(b) the term “Italy” means the Italian Republic;

(c) the terms “a Contracting State” and “the other Contracting State” mean Luxembourg or Italy, as the context requires

(d) the term “person” includes an individual, a company and any other body of persons;

(e) the term “company” means any legal person or any entity that is treated as a legal person for tax purposes

(f) the terms “enterprise of a Contracting State” and “enterprise of the other Contracting State” mean respectively an enterprise carried on by a resident of a Contracting State and an enterprise carried on by a resident of the other Contracting State ;

(g) the term “international traffic” means any transport by a ship or aircraft operated by an enterprise whose place of effective management is in a Contracting State, except when the ship or aircraft is operated solely between places in the other Contracting State

(h) the term “nationals” means:

(1) all natural persons who possess the nationality of a Contracting State;

(2) all legal persons, partnerships and associations formed in accordance with the laws in force in a Contracting State;

(i) the term “competent authority” means:

(1) in relation to Luxembourg, the Minister of Finance or his duly authorized representative; and

(2) in relation to Italy, the Ministry of Finance.

  1. For the purposes of the application of the Convention by a Contracting State, any term not otherwise defined shall have the meaning which it has under the law of that State concerning the taxes subject to the Convention, unless the context otherwise requires.

 

Article 4

DOMICILE FOR TAX PURPOSES

  1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax in that State by reason of his domicile.

The term “resident of a Contracting State” means any person who, under the laws of that State, is liable to tax in that State by reason of the person’s domicile, residence, place of management or any other criterion of a similar nature. However, this term shall not include any person who is subject to tax in that State in respect only of income from sources in that State or of capital situated therein.

  1. Where by reason of the provision of paragraph 1 an individual shall be deemed to be a

(a) he shall be deemed to be a resident of the Contracting State in which he has a permanent home available to him in each of the Contracting States

(b) if the Contracting State in which that person has his center of vital interests cannot be determined, or if he has a permanent home available to him in neither of the Contracting States, he shall be deemed to be a resident of that Contracting State. if the Contracting State in which that person has his centre of vital interests cannot be determined, or

(c) if he has an habitual abode in each of the Contracting States or in neither of them, he shall be deemed to be a resident of the of which he is a national;

(d) if such person is a national of both Contracting States or of neither of them, the competent authorities of the Contracting States shall settle the question by mutual agreement. the question by mutual agreement.

  1. Where by reason of the provision of paragraph 1 a person other than an individual is deemed to be a resident of each of the Contracting States, he shall be deemed to be a resident of the Contracting State in which his place of effective management is situated.

 

Article 5

PERMANENT ESTABLISHMENT

  1. For the purposes of this Convention, the term “permanent establishment” means a fixed place of business at which the business of the enterprise is wholly or partly carried on.
  1. The term “permanent establishment” includes in particular:

(a) a place of management;

(b) a branch ;

(c) an office;

(d) a factory;

(e) a workshop;

(f) a mine, quarry or other place of extraction of natural resources;

(g) a construction or assembly site lasting more than twelve months.

  1. A “permanent establishment” is not considered to exist if:
  2. a) use is made of facilities solely for the purpose of storing, displaying or delivering goods or merchandise belonging to the enterprise;

(b) goods or merchandise belonging to the enterprise are stored for the sole purpose of storage, display or delivery;

(c) goods belonging to the enterprise are stored solely for the purpose of processing by another enterprise;

(d) a fixed place of business is used solely for the purpose of purchasing goods or assembling information for the enterprise;

(e) a fixed place of business is used for the sole purpose of advertising, provision of information, scientific research or similar activities of a preparatory or auxiliary character for the enterprise. preparatory or auxiliary character.

  1. A person acting in a Contracting State on behalf of an enterprise of the other Contracting State, other than an agent of independent status referred to in paragraph 5, is con- _ _ the person has, in that State, the customary authority to conclude contracts on behalf of the enterprise, unless the activity of that person is Unless the activity of such person is limited to the purchase of goods or merchandise for the enterprise.
  1. An enterprise of a Contracting State shall not be deemed to have a permanent establishment in State merely because it carries on business in that other State through a broker, general commission agent or other the taxable income of the taxpayer shall be deemed to be the result of the taxable income of the taxpayer’s enterprise in the other Contracting State.
  1. The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a The fact that a company which is a resident of a Contracting State controls or is controlled by a company which is a resident of the other Contracting State or which carries on business in that other State (whether through a permanent establishment or otherwise) shall not of itself constitute a permanent establishment of the other.

 

Article 6

PROPERTY INCOME

  1. Income from immovable property, including income from agriculture or forestry, may be taxed in the Contracting State in which such property is situated. or forestry, may be taxed in the Contracting State in which such property is situated.
  1. The term “immovable property” shall be defined according to the law of the Contracting State in which the property in question is situated. The term shall in any case include fixtures and fittings, livestock and equipment of agricultural and forestry undertakings, as well as rights to which the provisions of private law concerning private law concerning land ownership. In addition, the usufruct of real estate and the rights to variable or fixed royalties for the exploitation or the concession of the exploitation of mineral deposits are considered as “real estate”. exploitation of mineral deposits, springs and other soil resources. Ships, ships and aircraft are not considered real estate.
  1. The provisions of paragraph 1 shall apply to income from the direct exploitation rental or leasing and any other form of exploitation of real estate.
  1. The provisions of paragraphs 1 and 3 shall also apply to income from the real property of an property of an enterprise, as well as to income from real estate used for the exercise of a independent profession.

 

Article 7

ENTERPRISE PROFITS

  1. The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State. unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business in such a manner, the profits If the enterprise carries on business in such a manner, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment.
  1. Subject to the provisions of paragraph 3, where an enterprise of a Contracting State carries on business in the other Contracting State through a permanent establishment situated therein situated therein, there shall in each Contracting State be attributed to that permanent establishment the profits which it might have made if it had been a the profits which it might have realised if it had constituted a distinct and separate enterprise engaged in the same or similar activities The taxpayer shall be entitled to the same benefits as the enterprise of which it is a permanent establishment, if the enterprise is a separate and distinct enterprise engaged in the same or similar activities under the same or similar conditions and dealing wholly independently with the enterprise of which it is a permanent establishment.

 

  1. In computing the profits of a permanent establishment, there shall be allowed as a deduction expenses the purposes of the permanent establishment, including executive and general administrative expenses incurred. the general administrative expenses so incurred, whether in the State in which the permanent establishment is situated or elsewhere.
  1. If it is customary in a Contracting State to determine the profits to be attributed to a permanent establishment on the basis of an apportionment of the total profits of the enterprise to its various parts nothing in paragraph 2 shall prevent that Contracting State from determining the profits according to the customary apportionment; the method of apportionment adopted shall, however, be such that the result shall be in accordance with the principles of this Article.
  1. No profit shall be attributed to a permanent establishment by reason of the fact that such permanent establishment has merely purchased goods or merchandise for the enterprise.
  1. For the purposes of the preceding paragraphs, the profits to be attributed to the permanent establishment shall be the same method each year, unless there is good and sufficient reason to the contrary to proceed otherwise.
  1. Where profits include items of income which are dealt with separately in other Articles of this Convention, the provisions of those Articles shall not be affected by the provisions of this Article.

 

Article 8

SEA AND AIR NAVIGATION

  1. 1. Profits from the operation of ships or aircraft in international traffic shall be taxable only in the shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
  1. If the place of effective management of a shipping enterprise is on board a ship, that place of effective ship, that place of business shall be deemed to be in the Contracting State where the home port of that ship is situated, or in the absence of a home port, in the Contracting State of which the operator of the ship is a resident.
  1. The provisions of paragraph 1 shall also apply to profits derived by an enterprise of a Contracting State from participation in a pool, a joint business or an international operating agency. 

 

Article 9

ASSOCIATED ENTERPRISES

Where

(a) an enterprise of a Contracting State participates directly or indirectly in the management, control or capital of an enterprise of the other Contracting State, or

(b) the same persons participate directly or indirectly in the management, control or capital of an enterprise of a Contracting State and an enterprise of the other Contracting State, and in either case the two enterprises are bound in their commercial or financial relations by terms and conditions, accepted or imposed, that differ from those that would be made between independent enterprises, the profits which, but for these conditions, would have been obtained by one of the but for those conditions could not in fact have been obtained by one of the enterprises, may be included in the profits of that profits of that enterprise and taxed accordingly.

 

Article 10

DIVIDENDS

  1. Dividends paid by a company that is a resident of a Contracting State to a resident of the other Contracting State may be taxed as dividends.
  1. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident, and according to the laws of that State, but if the person receiving the dividends is the beneficial owner thereof, the tax so charged shall not exceed 15 percent of the gross amount of the dividends. This paragraph shall not affect the taxation of the company in respect of the profits out of which the dividends are payment of the dividends.
  1. The term “dividends” as used in this section means income from shares or profit sharing certificates, mining shares, founder’s shares or other profit shares, with the exception of debt claims, as well as income from other shares subject to the same tax regime as income from shares under income from shares by the legislation of the State of which the distributing company is a resident.
  1. The provisions of paragraphs 1 and 2 shall not apply where the beneficial owner of the dividends, being a resident of a Contracting State, carries on business in the other Contracting State of which the company paying the dividends is a resident, either company paying the dividends is a resident, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in the other Contracting State independent personal services from a fixed base situated therein, and the company paying the dividends is a resident of that country, either carries on a trade or business through a permanent establishment situated therein, or performs independent personal services from a fixed base situated therein, and the holding in respect of which the dividends are paid is effectively connected with that country. In such a case, the dividends may be taxed in the said other Contracting State according to its own domestic law.

 

  1. Where a company that is a resident of a Contracting State derives profits or income from the other Contracting State, the company may be taxed in that other State in accordance with its domestic law. of the other Contracting State, that other State may not impose any tax on dividends paid by the company, except to the extent that such dividends are paid to a resident of that other State or to the extent that the holding in respect of which the dividends are paid is effectively connected with a permanent establishment or a fixed base situated in that other State, nor subject the company’s undistributed profits to a tax on undistributed profits, even if the dividends paid or undistributed profits consist wholly or partly of profits or income arising in that other income arising in such other State.

 

Article 11

INTERESTS

  1. Interest arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
  1. However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the person who receives the interest in that State does not However, such interest may also be taxed in the Contracting State in which it arises and according to the laws of that State, but if the recipient of the interest is the beneficial owner thereof, the tax so charged shall not exceed 10 percent of the gross amount of the interest.
  1. Notwithstanding the provisions of paragraph 2, interest arising in one of the Contracting States shall be exempt from tax in that State if:

(a) the payer of the interest is the Government of that Contracting State or a local authority thereof, or

(b) the interest is paid to the Government of the other Contracting State or a local authority thereof or to institutions or bodies (including financial institutions) wholly owned by that Contracting State or a local authority thereof, or

(c) interest is paid to other institutions or bodies (including financial institutions) in respect of financing provided by them under agreements between the Governments of the Contracting States.

  1. The term “interest” as used in this Article means income from governmental funds, from obligations, whether or not secured by mortgage or otherwise entitled to participate in profits, and debt-claims of every kind, as well as all other income assimilated to income from money lent or money lent by the tax laws of the State in which the income arises.

 

  1. The provisions of paragraphs 1 and 2 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 situated therein, or performs in the other Contracting State in which the interest arises independent personal services from a fixed base situated therein, and the debt-claim giving rise to the interest is effectively connected with it. In such a case, the interest may be taxed. In such a case, the interest may be taxed in the said Contracting State according to its own domestic law.
  1. Interest shall be deemed to arise in a Contracting State when the payer is that State itself, a political subdivision or an autonomous community State itself, a political or administrative subdivision, a local authority or a resident of that State. However, where 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, the interest shall be deemed to arise in that State. giving rise to the payment of interest incurred and which bears the expense of that interest such interest shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
  1. Where, by reason of a special relationship between the payer and the beneficial owner, or beneficiary or between both of them and third persons, the amount of the interest, having regard to the debt-claim for which it is paid, exceeds that which would have been agreed upon by the debtor and the beneficial beneficiary in the absence of such relationship, the provisions of this article shall apply only to the latter amount. In such a case, the excess part of the payments shall remain taxable according to the laws of each Contracting State, due regard being due to the other provisions of this Convention.

 

Article 12

ROYALTIES

  1. Royalties arising in a Contracting State and paid to a resident of the other Contracting State may be taxed in that other State.
  1. However, such royalties may be taxed in the Contracting State in which they arise and according to the laws of that State, but if the person receiving the royalties is the beneficial owner thereof, the tax so the tax so charged shall not exceed 10 percent of the gross amount of the royalties.

 

  1. The term “royalties” as used in this Article means payments of any kind received for the use of, or the right to use, any copyright of literary, artistic or scientific work, including films, scientific work, including motion picture films and recordings for radio and television broadcasting, a patent, a trademark, a design, a model, a copyright, a design patent or a design, plan, secret formula or process, as well as for the use of or the right to use industrial, commercial or scientific equipment and for information concerning industrial, commercial or scientific experience.
  1. The provisions of paragraphs 1 and 2 shall not apply if the beneficial owner of the royalties, being a resident of a Contracting State, carries on business in the other Contracting State in which the royalties arise, carries on business in the other Contracting State through a permanent establishment situated therein, or performs in the other Contracting State in which the royalties arise independent personal services from a fixed base situated therein, and the the right or property giving rise to the royalties is effectively connected with it. In such case, the royalties may be In such case, the royalties may be taxed in the said other Contracting State according to its own domestic law.

 

  1. Royalties 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. However, where the payer of the royalties, whether or not a resident of a Contracting State, has in a Contracting State a permanent establishment or a fixed base in connection with which the contract giving rise to the payment of the royalties was made and which bears the expense of such royalties shall be deemed to arise in the State in which the permanent establishment or fixed base is situated.
  2. Where, by reason of a special relationship between the payer and the beneficial owner, or beneficial owner, the amount of the royalties, having regard to the service for which they are paid, shall be for which they are paid, exceeds the amount that would have been agreed upon by the debtor and the beneficial owner in the absence of such relationship, the provisions of this article shall apply only to the latter amount. In such a case, the excess part of the payments shall remain taxable in accordance with the laws of each Contracting State and having regard to the other provisions of this Convention.

 

Article 13

CAPITAL GAINS

  1. Gains from the alienation of immovable property, as defined in paragraph 2 of Article 6, may be taxed in the Contracting State in which such property is situated.
  1. Gains from the alienation of movable property forming part of the business property of a permanent establishment that an enterprise of a Contracting State has in the other Contracting State, or movable property that constituting a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of performing independent personal services, including such gains from the alienation of such permanent establishment (alone or with the whole enterprise) or fixed base, may be taxed in that other State. However, gains from the alienation of movable property referred to in paragraph 3 of Article 23 shall be taxable only in the Contracting State in which the property in question themselves are taxable under that Article.
  1. Gains from the alienation of any property other than that referred to in paragraphs 1 and 2 shall be taxable only in the Contracting State of which the alienator is a resident.

 

Article 14

INDEPENDENT PERSONAL SERVICES

  1. Income derived by a resident of a Contracting State in respect of professional services or other independent activities of a similar character shall be taxable only in that State unless the resident has a fixed base regularly available in the other Contracting State for the purpose of performing his activities. If he has such a base, the income may be taxed in the other State but only to the extent that it is attributable to that fixed base.
  1. The term “professional services” includes in particular independent activities of a scientific, literary, artistic scientific, literary, artistic, educational or teaching activities, as well as the independent activities of doctors, lawyers, engineers, architects, dentists and accountants.

 

Article 15

DEPENDENT PROFESSIONS

  1. Subject to the provisions of Articles 16, 18 and 19, salaries, wages and other similar  remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is exercised in that State, remuneration derived therefrom may be taxed in that other State.

 

  1. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if 

(a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the taxable year concerned, and

(b) the remuneration is paid by or on behalf of an employer who is resident of the other State, and

(c) the remuneration is not borne by a permanent establishment or a fixed base which the employer has in the other State.

  1. Notwithstanding the preceding provisions of this Article, remuneration in respect of an employment exercised aboard a ship or aircraft operated in international traffic may be taxed in the Contracting State in which the place of effective management of the enterprise is situated.

 

Article 16

TANTIEMES

Directors’ fees and other similar payments derived by a resident of a Contracting State in his capacity as a member of the board of directors, supervisory board or other similar organ of a company which is a member of the board of directors or other similar organ of the company which is a resident of the other Contracting State may be taxed in that other State.

 

Article 17

ARTISTS AND SPORTSMEN

  1. Notwithstanding the provisions of Articles 14 and 15, income derived by a resident of a Contracting State as an entertainer, such as a theatre, motion picture, radio or television artiste, or as a musician, actor or athlete, from his personal activities as such exercised in the other Contracting State, shall be treated as income for the purposes of this Article. such as a theater, motion picture, radio or television artiste, or a musician or as an athlete, may be taxed in that other State.
  1. Where income from activities which an entertainer or sports person performs personally and in that capacity is attributed and in that capacity is attributed not to the entertainer or athlete himself but to another person that income may be taxed, notwithstanding the provisions of Articles 7, 14 and 15, in the Contracting State in which the activities of the artist or athlete are carried on.

 

Article 18

PUBLIC SOCIAL SECURITY PENSIONS AND BENEFITS

  1. Subject to the provisions of paragraph 2 of Article 19, pensions and other similar remuneration paid to a resident of a Contracting State in respect of past employment shall be taxable only in that State.
  1. Notwithstanding the provisions of paragraph 1, pensions and other amounts paid under the social security legislation of a Contracting State may be taxed in that State.

 

Article 19

PUBLIC OFFICES

  1. (a) Remuneration, other than a pension, paid by a Contracting State or a political or administrative subdivision or local authority thereof to an individual in respect of services rendered to that State or subdivision or local authority shall be taxable only in that State.

(b) However, such remuneration shall be taxable only in the other Contracting State if the services are rendered in that State and the recipient of the remuneration is a resident of that State who :

(i) has the nationality of that State without having the nationality of the State in which the remuneration arises, or

(ii) did not become a resident of that State solely for the purpose of rendering the services.

  1. (a) Pensions paid by a Contracting State or a political or administrative subdivision or local authority thereof, either directly or out of funds established by it, to an individual in respect of services rendered to that State or subdivision or authority shall be taxable only in that State.

(b) However, such pensions shall be taxable only in the other Contracting State if the recipient is a resident of that State and is a national of that State without being a national of the State in which the pensions arise.

  1. The provisions of Articles 15, 16 and 18 shall apply to remuneration or pensions paid in respect of services rendered in connection with a business carried on by a Contracting State or one of its Contracting State or a political or administrative subdivision or local authority thereof.

 

Article 20

TEACHERS

The remuneration of a professor or other member of the teaching staff who is, or was immediately before visiting a Contracting State a resident of the other Contracting State and who is present in the first-mentioned State solely for the purpose of teaching or scientific research for a period not exceeding two years at a university or other institution for education or scientific research on a non-profit basis, shall be taxable only in the said other Contracting State, provided that the remuneration is derived from sources outside the first-mentioned

 

Article 21

STUDENTS

Amounts derived by a student or trainee who is, or was immediately before visiting a Contracting State, a resident of the other Contracting State may be taxed in that other State provided that the remuneration is derived from sources outside the first-mentioned State to a Contracting State, a resident of the other Contracting State and who is present in the first-mentioned State solely for the State for the sole purpose of furthering his education or training, receives for his maintenance, education or training shall not be taxable in that State, provided that such remuneration is derived from sources outside that State.

 

Article 22

OTHER INCOME

  1. Items of income of a resident of a Contracting State, wherever arising, not dealt with in the foregoing Articles of this Convention shall be taxable only in that State.
  1. The provisions of paragraph 1 shall not apply to income, other than income from immovable property as defined in paragraph 2 of Article 6, if the recipient of such income, being a resident of a Contracting State of such income, being a resident of a Contracting State, carries on business in the other Contracting State through business activity through a permanent establishment situated therein, or performs in the other Contracting State the right or property in respect of which the income is paid is effectively connected with such permanent establishment or fixed base. In such a case, items of income may be taxed in that other Contracting State in accordance with its own domestic law.

 

Article 23

FORTUNE

  1. Capital represented by immovable property referred to in Article 6 owned by a resident of a Contracting State and situated in the other Contracting State may be taxed in that other State.
  1. Capital represented by movable property forming part of the business property of a permanent establishment which an enterprise of a Contracting State has in the other Contracting State, or by movable property pertaining to a fixed base available to a resident of a Contracting State in the other Contracting State for the purpose of carrying on business in that State, may be taxed in that other State. A resident of a Contracting State may be taxed in that other State on income derived from a permanent establishment that an enterprise of a Contracting State has in the other Contracting State or from movable property that belongs to a fixed base available to a resident of a Contracting State in the other State for the purpose of performing independent personal services.
  1. Capital represented by ships and aircraft operated in international traffic and by movable property pertaining to the operation of such ships or aircraft shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated.
  1. All other elements of the capital of a resident of a Contracting State shall be taxable only in that State.

 

Article 24

PROVISIONS FOR THE AVOIDANCE OF DOUBLE TAXATION

  1. In Luxembourg:

(a) Where a resident of Luxembourg receives income or has capital which, in accordance with the provisions of this Convention, may be taxed in Italy, Luxembourg shall exempt such income or capital from tax, subject to the provisions of subparagraph (b), but may, in calculating the amount of tax on the remaining income or capital of such resident, apply the same rate as if the same rate as if the income or capital in question had not been exempted.

(b) Where a resident of Luxembourg receives income which, in accordance with the provisions of Articles 10, 11 and 12, may be taxed in Italy, Luxembourg shall allow a deduction from the tax imposed on that resident of an amount equal to the tax paid in Italy. The sum thus deducted may not, however, exceed the fraction of the tax, calculated before the deduction, corresponding to the income received from Italy.

  1. In Italy:

When a resident of Italy receives items of income that are taxable in Luxembourg, Italy, in assessing its taxes on income under Article 2 of this Convention, may include in the taxable amount of such taxes such items of income unless specific provisions of this Convention apply.

In such a case, Italy shall deduct from the taxes so assessed the income tax paid in Luxembourg, but the amount of the deduction shall not exceed the amount of the tax so assessed. Luxembourg, but the amount of the deduction may not exceed the proportion of the Italian tax attributable to the said items of income in the proportion in which those items participate in the formation of the total income. However, no deduction will be granted in the event that the item of income is subject to tax in Italy by way of a withholding tax at source at the request of the recipient of the income, in accordance with Italian law.

 

Article 25

NON-DISCRIMINATION

  1. Nationals of a Contracting State shall not be subjected in the other Contracting State to any taxation or obligation that is different from or more burdensome than that to nationals of that other State who are or maybe nationals of that other State who are in the same situation. This provision shall also apply, notwithstanding the provisions of Article 1, to persons who are not resident of one or both of the Contracting States.

 

  1. The taxation of a permanent establishment which an enterprise of a Contracting State has in the other State shall not be less favorably assessed in that other State than the taxation of enterprises of that other State carrying on the same activity. This provision shall not be construed to require a Contracting State to grant to residents of the other Contracting State the personal deductions, allowances and reductions of tax on account of civil status or family responsibilities which it of family status or dependency that it grants to its own residents.

 

  1. Except where the provisions of Article 9, paragraph 7 of Article 11 or paragraph 6 of Article 12 apply, the paragraph 6 of Article 12, interest, royalties and other charges paid by an enterprise of a Contracting State to a resident of the other Contracting State shall, in determining the taxable profits of that enterprise under the same conditions as if they had been paid to a resident of the first-mentioned State. Similarly, debts of an enterprise of a Contracting State to a resident of the other Contracting State shall, for the purpose of determining the taxable capital of that same condition as if they had been contracted with a resident of the first-mentioned State. of the first-mentioned State.
  1. Enterprises of a Contracting State, the capital of which is wholly or partly owned or controlled, directly or indirectly owned or controlled in whole or in part, directly or indirectly, by one or more residents of the other Contracting State, shall not be the first-mentioned Contracting State to any taxation or any requirement connected therewith which is other or more burdensome than that to which other enterprises of the same kind in the first-mentioned State are or may be subjected. other enterprises of the same kind in the first-mentioned State.
  1. The term “taxation” as used in this Article means taxation of every kind and description.

 

Article 26

MUTUAL AGREEMENT PROCEDURE

  1. Where a person considers that the actions of one or both of the Contracting States result or will result in taxation not in accordance with the States result or will result for that person in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, submit his case to the States, submit his case to the competent authority of the Contracting State of which he is a resident or, if his case comes under of the Contracting State of which he is a resident or, if his case comes under paragraph 1 of Article 25, to that of the Contracting State of which he is a national. The case shall be submitted within two years after the first notification of the measure that which results in taxation not in accordance with the Convention.
  1. That competent authority shall endeavor, if the objection appears to it to be justified and if it is not itself able to resolve the case by mutual agreement with the competent authority of the other country authority of the other Contracting State, with a view to the avoidance of taxation not in accordance with the Convention.
  1. The competent authorities of the Contracting States shall endeavor by mutual agreement to resolve any difficulties or doubts arising as to the interpretation or application of the Convention.
  1. The competent authorities of the Contracting States may communicate directly with each other with a view to reaching agreement as set forth in the preceding paragraphs. If an oral exchange of views agreement, such discussions may take place in a Commission composed of representatives of the competent authorities of the Commission composed of representatives of the competent authorities of the Contracting States.

 

Article 27

EXCHANGE OF INFORMATION

  1. The competent authorities of the Contracting States shall exchange such information as is necessary to the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes covered by the Convention to the extent that the taxation thereunder is not contrary to the Convention. is not contrary to the Convention. The exchange of information is not restricted by Article 1. Information received by a Contracting State shall be treated as secret in the same manner as information obtained under the domestic laws of that State and shall be disclosed only to persons or authorities persons or authorities (including courts and administrative bodies) concerned with the assessment or collection of, the enforcement or prosecution in respect of, or the determination of appeals in relation to, the taxes covered by the Convention. Such persons or authorities shall use such information only for such purposes. They may disclose such information in public court proceedings or in judgments.
  1. In no case shall the provisions of paragraph 1 be construed to impose on a Contracting State the obligation

(a) to take administrative action at variance with the laws and administrative practice of that or of the other Contracting State;

(b) to supply information that is not obtainable under the laws or in the normal course of the administration of that or of the other Contracting State;

(c) to supply information which would disclose any trade, business, industrial, commercial or professional secret or any information the disclosure of which would be contrary to public policy.

 

Article 28

DIPLOMATIC AND CONSULAR OFFICERS

The provisions of this Convention shall not affect the fiscal privileges of diplomatic or consular officials diplomatic or consular officials under the general rules of international law or under the law of nations or under the provisions of special agreements.

Article 29

CLAIMS FOR REIMBURSEMENT

  1. Taxes imposed in one of the Contracting States by way of deduction at source shall be refunded on application by the person concerned where the right to levy such taxes is limited by the provisions of this Convention.
  1. Requests for refunds, to be submitted within the time limits established by the laws of the contracting State obliged to make such refund, shall be accompanied by an official certificate from the contracting state of which the taxpayer is a resident, certifying the existence of the conditions required to benefit from the exemptions or reductions provided for in Convention.
  1. The competent authorities of the Contracting States shall, in accordance with the provisions of Article 26, the procedures for the application of this Article.

 

Article 30

ENTRY INTO FORCE

  1. The present Convention shall be ratified and the instruments of ratification shall be exchanged as soon as possible in Rome.
  1. This Convention shall enter into force upon the exchange of the instruments of ratification and its provisions shall

(a) to taxes due at source on income allocated or paid on or after January 1 of the year 1978;

(b) to other taxes for taxable periods ending on or after January 1, 1978.

  1. Claims for refunds under this Convention relating to taxes payable by residents of either Contracting State for the period from January 1, 1978, to the date of entry into force of this Convention shall be made in accordance with the provisions of this Convention. 1978 and the date of entry into force of this Convention, may be made within two years from the date of entry into force of this Convention. two years after the date of entry into force of this Convention.

 

Article 31

DENUNCIATION

This Convention shall remain in force until denounced by one of the Contracting States.

Each of the Contracting States may denounce the Convention through diplomatic channels at least six months each contracting State may denounce the Convention by diplomatic means with a minimum of six months’ notice before the end of each calendar year after the fifth calendar year following the entry into force of the Convention. Each of the Contracting States may denounce the Convention by diplomatic means with a minimum of six months’ notice before the end of each calendar year following the fifth calendar year after the Convention enters into force. In this case, the Convention will apply for the last time :

(a) taxes due at source on income paid on or before December 31 of the year of termination; and

(b) to other taxes for taxable periods ending on or before December 31 of the same year.

IN WITNESS WHEREOF the plenipotentiaries of the two States have hereunto set their hands and seals the present Convention and have affixed their seals thereto.

DONE in duplicate at Luxembourg, on 3 June 1981, in the French and Italian languages, both texts being equally authentic.

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