In May 2025, the Italian Revenue Agency issued two responses to tax rulings that provide meaningful clarification for professionals managing foreign trusts with connections to Italy. Responses No. 144 and 145 address two distinct yet closely related issues: on one hand, the taxation of dividends distributed by Italian companies to foreign trusts; on the other, the qualification of a trust as an autonomous taxpayer. For a Swiss trustee company, these clarifications serve as an important operational reference, particularly in terms of compliance and tax planning.
Response No. 144/2025 focuses on the withholding tax applicable to Italian dividends received by a foreign trust. The case examined involves a trust established under English law, domiciled in Malta, and administered by a professional trustee authorized by the Malta Financial Services Authority. The question raised was whether the reduced 1.20% withholding tax rate, provided under Article 27, paragraph 3-ter, of Presidential Decree No. 600/1973 and reserved for foreign entities resident in EU or EEA countries, could be applied. The Agency clarified that this reduced rate applies exclusively to entities that, in addition to being fiscally resident in a treaty country, possess a corporate legal form. Although the trust is subject to tax in its country of residence, it does not qualify as a corporation and therefore cannot benefit from the reduced rate. Consequently, dividends distributed by an Italian company to such a trust are subject to the standard 26% withholding tax, unless otherwise provided by a double taxation treaty.
This clarification has direct implications for Swiss trustee companies administering trusts with holdings in Italian companies. It is essential to verify the legal form of the income recipient and to consider the application of double taxation agreements. In some cases, it may be appropriate to evaluate corporate restructuring options to optimize the tax treatment.
Response No. 145/2025, on the other hand, addresses the issue of the fiscal qualification of a foreign trust. The trust in question is irrevocable, has a duration of 125 years, and excludes the settlor from any beneficial interest. The trustee is Maltese, the investment adviser is Swiss, and the protector is an independent Italian lawyer. The Agency concluded that the trust may be considered an autonomous taxpayer, and not an interposed entity, provided certain substantive conditions are met. Specifically, the Agency assessed the genuine dispossession by the settlor, effective asset segregation, independent management by the trustee, even in the presence of delegation, and the independence of the protector, who has no familial ties to the settlor or beneficiaries.
This second clarification confirms that, when properly structured and documented, a foreign trust can be recognized as a separate taxable entity, with all the implications this entails in terms of transparency, compliance, and reporting obligations. This means establishing clear and independent governance, supported by evidentiary documentation that demonstrates asset segregation and the effective exclusion of the settlor.
In summary, Responses No. 144 and 145/2025 offer a more defined framework for how Italian tax law views foreign trusts. On one hand, they reaffirm that legal form is decisive for the application of preferential tax rates; on the other, they acknowledge that substance prevails over form, and that a well-managed trust can be treated as a distinct fiscal entity. For Swiss fiduciary operators, these clarifications provide valuable guidance for structuring relationships with Italy correctly, avoiding disputes, and offering clients compliant and sustainable solutions.
Sources:
Italian Revenue Agency (2025). Reply No. 144/2025. Rome: Agenzia delle Entrate.
Italian Revenue Agency (2025). Reply No. 145/2025. Rome: Agenzia delle Entrate.
