The Protocol amending the Double Taxation Avoidance Treaty between India and Italy (signed in 1993) was signed between the two countries, here today.  It was signed Mr. K. M. Chandrasekhar, Secretary, Department of Revenue on behalf of the Government of India and H.E Mr. Antonio Armellini, the Ambassador of Italy, on behalf of the Government of Italy.

The salient features of the Protocol amending the Indo-Italian DTAA are as under: -

In line with other EU country treaties, tax withholding rates have now been reduced as below: -

*        15% - if beneficial owner is a Co., which owns 10% of shares of Co. paying dividend

          25% - in all other cases.

          Lowering of withholding tax on royalties and FTS will promote greater FDI and technical collaboration between India and Italy.

(i)       Permanent Establishment – A new clause has been introduced to provide that rendering of service by employees or other personnel will constitute a Permanent Establishment (PE), if these activities continue for more than six months in any twelve months period.

A separate paragraph to treat an ‘insurance enterprise’ as having a PE is also introduced, if it collets premium and insures risks in the other contracting state.

(ii)      Collection Assistance – A new Article on assistance in collection of taxes has been added in the DTAC to ensure assistance in collection of taxes covered by the Convention, in line with the OECD Model Treaty.

BSC/BY/GN-16/06