Exemption or refund under EU Parent Subsidiary Regime
The European Union Parent Subsidiary Regime aims at eliminating tax obstacles for profit distributions between parent companies and subsidiaries based in different Member States. The Directive therefore gives a tax exemption for dividends and other profit distributions paid by subsidiary companies to their parent companies. This eliminates the risk of double taxation of parent companies on the profits of their subsidiaries.
Business taxpayers can require the exemption from the Italian taxation on dividends and on other equivalent financial tools distributed by a subsidiary company in Italy to its parent company or its permanent establishment located in another Member State or claim the refund of the Italian tax withheld in case the exemption regime has not been directly applied.