John Skates

A UK resident will be working as CEO of an Italian company in Italy but will not spend sufficient time in Italy to become resident there. Withholding tax at the rate of 30% will be deducted from his salary under what is known as e un'imposta sostitutive dell' IRPEF. This is defined as taking the place of other taxes and allows a single rate to apply. It is not specifically mentioned in DT10153 - Italy - Admissible taxes as an allowable tax for credit purposes but it is a tax on income and Article 2 (2) of the DTA convention states that it will apply to any identical or substantially similar taxes which are imposed by either country at a later date. Please confirm that withholding deductions under e un'imposta sostitutive dell'IRPEF are allowable in full as a credit against the UK income tax payable on the Italian remueration, subject to the UK tax rate being at least 30%.