S.I. No. 64/1973 - Double Taxation Relief (Taxes on Income) (Italy) Order, 1973.

1. This Convention shall be ratified and the instruments of ratification shall be exchanged at Rome as soon as possible.

2. The Convention shall enter into force upon the exchange of instruments of ratification and its provisions shall have effect

(

a

) In Ireland

(i) as respects income tax (including sur-tax) for any year of assessment beginning on or after the 6th April, 1967;

(ii) as respects corporation profits tax, for any accounting period beginning on or after the 1st April, 1967, and for the unexpired portion of any accounting period current at that date;

(

b

) in Italy

as respects Italian taxes for the taxable years beginning on or after the 1st January, 1967.

ARTICLE 28

Termination

This Convention shall remain in force indefinitely, but either of the Contracting States may denounce the Convention, through diplomatic channels, by giving notice of the termination at least six months before the end of any calendar year after the year 1971. In such event the Convention shall cease to have effect

(

a

) in Ireland

(i) as respects income tax (including sur-tax) for any year of assessment beginning on or after the 6th April in the calendar year next following that in which such notice is given;

(ii) as respects corporation profits tax, for any accounting period beginning on or after the 1st April in the calendar year next following that in which such notice is given and for the unexpired portion of any accounting period current at that date;

(

b

) in Italy

as respects Italian taxes for the taxable years beginning on or after the 1st January in the calendar year next following that in which such notice is given.

In witness whereof the Plenipotentiaries of the two Contracting States, duly authorised thereto, have signed the present Convention and affixed thereto their seals.

Done in duplicate at Dublin the 11th June, 1971, in the English and Italian languages, each text being equally authoritative.

For the Government of Ireland

P. J. HILLERY

For the Government of the Italian Republic

ALDO MORO

SUPPLEMENTAL PROTOCOL TO THE CONVENTION BETWEEN IRELAND AND ITALY FOR THE AVOIDANCE OF DOUBLE TAXATION AND THE PREVENTION OF FISCAL EVASION WITH RESPECT TO TAXES ON INCOME

The Government of Ireland and the Government of the Italian Republic, having regard to the Convention between them for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed today, have agreed on the following further provisions which will form an integral part of the said Convention

ARTICLE 1

(

a

) Where any Article of this Convention provides (with or without conditions) that income derived by a resident of a Contracting State from sources within the other Contracting State shall be taxable only in the first-mentioned State or shall be subject to a reduced rate of tax in the other State and, under the law in force in that first-mentioned State, the said income is subject to tax by reference to the amount thereof which is remitted to or received in that State and not by reference to the full amount thereof, then the exemption or reduction in rate in the other State resulting from such Article shall apply only to so much of the income as is remitted to or received in the first-mentioned State.

(

b

) Article 7 shall have effect in respect of profits earned from the operation of aircraft in international traffic as from the 1st day of January, 1960.

(

c

) (i) Where under Chapter IV of Part XXV of the

Income Tax Act, 1967

(No. 6 of 1967) (hereinafter referred to as " the first enactment "), or under Chapter I of Part XXV of that Act (hereinafter referred to as " the second enactment "), tax on the profits of a company is not payable on the entire amount of those profits, then in the case of a dividend out of those profits received from that company by a company which is a resident of Italy and which holds directly at least 51 per cent of the capital of the company paying the dividend, Italy will give credit in respect of the Irish tax which would have been paid but for the first enactment or the second enactment, as the case may be, in accordance with the provisions of Article 21.

(ii) In the case of the first enactment, subparagraph (i) above shall not have effect in relation to dividends paid out of profits arising after the 5th day of April, 1980, and in the case of the second enactment, arising after the 25th day of November, 1983.

ARTICLE 2

This Protocol shall be ratified and instruments of ratification shall be exchanged at Rome.

It shall enter into force simultaneously with the Convention for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income signed today and shall have the same duration as the Convention in accordance with Articles 27 and 28 of the Convention.

In witness whereof the Plenipotentiaries of the two Contracting States, duly authorised thereto, have signed the present Protocol and affixed thereto their seals.

Done in duplicate at Dublin the 11th day of June, 1971, in the English and Italian languages, each text being equally authoritative.

For the Government of Ireland

For the Government of the Italian Republic

P. J. HILLERY

ALDO MORO

GIVEN under the Official Seal of the Government, this 13th day of March, 1973.

SEÁN Ó LOINSIGH,

Taoiseach.

EXPLANATORY NOTE.

This Order gives the force of law to the Convention and the associated Protocol with Italy which are set out in the Schedule.

Under the Convention certain classes of income derived from one country by a resident of the other country are (subject to certain conditions) to be exempt from tax in the former country. These classes are trading profits not arising through a " permanent establishment " [Article 6], shipping and air transport profits [Article 7], patent and copyright royalties [Article 11], profits from professional or other independent activities not attributable to a fixed base [Article 13], pensions (other than Government pensions) [Article 17], and certain earnings of temporary residents [Articles 14 and 19]. Government and local authority salaries and pensions are normally to be taxed by the paying Government only [Article 18].

In general dividends paid by Irish companies to residents of Italy are to be exempt from Irish sur-tax; the rate of withholding tax on dividends paid by Italian companies to Irish residents is not to exceed 15 per cent. [Article 9]. The tax on interest arising in Italy to residents of Ireland is not to exceed 10 per cent. and

vice versa

[Article 10].

In the matter of personal allowances and reliefs for tax purposes, each country is to treat residents of the other in the same way as its own non-resident nationals [Article 22].

Where, under the Convention, income derived from one country by a resident of the other may be taken into account for tax purposes in both countries, a measure of double taxation relief is to be granted by the latter country. In Ireland, a credit in respect of Italian tax paid on income from sources in Italy is to be allowed against the Irish tax charged on that income. In the case of Italian dividends, the credit is to take into account an appropriate part of the Italian tax on the profits of the company out of which the dividends are paid. Where, however, the recipient of any item of Italian income is a company incorporated in Ireland which is not resident (managed and controlled) in Ireland, the credit for the Italian tax is allowable against corporation profits tax but only in so far as the Italian tax exceeds 27 per cent. of the item of Italian income. In Italy, relief from double taxation is given by way of credit against the relevant Italian taxes for Irish tax on Irish income in an amount not exceeding the Italian taxes on the item of Irish income. Where, however, the item of Irish income is subject only to " the complementary tax " or only to " the tax on companies " credit is allowable only for that part of the Irish tax which exceeds 27 per cent. of the item of Irish income. Where an Italian company holds at least 51 per cent. of the capital of an Irish company which pays a dividend out of profits which have been exempted or partially relieved from Irish income tax by virtue of Irish tax incentive reliefs, Italy in calculating the credit to be allowed to the Italian company against the Italian tax on the dividend, will take into account the Irish income tax which could have been deducted from the dividend but for the Irish tax incentive relief.

The Convention contains provisions for the safeguarding of nationals and enterprises of one country against discriminatory taxation in the other country [Article 23], for consultation [Article 24] and for the exchange of information [Article 25] between the taxation authorities of the two countries.

The Convention takes effect in Ireland for the fiscal year 1967-68 and subsequent years [Article 27].

3. The competent authorities of the Contracting States shall endeavour to resolve by mutual agreement any difficulties or doubts arising as to the interpretation or application of the Convention. They may also consult together for the elimination of double taxation in cases not provided for in the Convention.

4. The competent authorities of the Contracting States may communicate with each other directly for the purpose of reaching an agreement in the sense of the preceding paragraphs. When it seems advisable in order to reach agreement to have an oral exchange of opinions, such exchange may take place through a Commission consisting of representatives of the competent authorities of the Contracting States.

ARTICLE 25

Exchange of information

5. The provisions of this Article shall not be construed as obliging a Contracting State to grant to residents of the other Contracting State any personal allowances, reliefs and reductions for taxation purposes on account of civil status or family responsibilities which it grants to its own residents, nor as obliging Ireland to grant to nationals of Italy any relief or exemption allowed in accordance with the provisions of the

Finance (Profits of Certain Mines) (Temporary Relief from Taxation) Act, 1956

(No. 8 of 1956), as subsequently amended, or of Part II of the

Finance (Miscellaneous Provisions) Act, 1956

(No. 47 of 1956), as subsequently amended, or of Chapter II or Chapter III of Part XXV of the

Income Tax Act, 1967

(No. 6 of 1967).

6. The provisions of this Article shall not be construed as affecting the imposition in Italy of the tax on companies (imposta sulle società) charged according to Italian law.

7. In this Article the term "taxation" means taxes of every kind and description.

ARTICLE 24

Mutual agreement procedure

8. The competent authorities of the Contracting States shall by mutual agreement settle the mode of application of paragraph 2.

ARTICLE 10

Interest

S.I. No. 64 of 1973.

DOUBLE TAXATION RELIEF (TAXES ON INCOME) (ITALY) ORDER, 1973.

WHEREAS it is enacted by

section 361

(1) of the

Income Tax Act, 1967

(No. 6 of 1967), that if the Government by order declare that arrangements specified in the order have been made with the government of any territory outside the State in relation to affording relief from double taxation in respect of income tax, sur-tax or corporation profits tax and any taxes of a similar character, imposed by the laws of the State or by the laws of that territory and that it is expedient that those arrangements should have the force of law, the arrangements shall, notwithstanding anything in any enactment, have the force of law

AND WHEREAS it is further enacted by section 361 (6) of that Act that where such an order is proposed to be made, a draft thereof shall be laid before Dáil Éireann and the order shall not be made until a resolution approving of the draft has been passed by Dáil Éireann

AND WHEREAS a draft of this Order has been laid before Dáil Éireann and a resolution approving of the draft has been passed by Dáil Éireann

NOW, the Government, in exercise of the powers conferred on them by

section 361

of the

Income Tax Act, 1967

(No. 6 of 1967), hereby order as follows