Italy applies a substantial withholding tax on dividends paid to foreign investors. When an Italian company distributes a dividend abroad, it withholds 26% at source before the investor is paid.

For many foreign investors, however, that is not the rate the Italian/EU law actually requires. Under the double tax treaties, under EU law, and under the principle of the free movement of capital, the applicable rate may be materially lower, in some cases zero.

In practice, this reduced or nil rate is frequently not applied when the dividend is paid, and the full 26% is withheld. As a result, non-resident investors may have borne Italian tax above the amount actually due, often across several years of distributions.

The Legal Position

The right to a refund is grounded in EU law: the free movement of capital, and it has been repeatedly confirmed by the Italian Supreme Court (Corte di Cassazione) and the Court of Justice of the European Union.

Our Proposal

Martingale Risk assists non-resident investors who have paid undue tax on dividends received from Italian companies in recovering the withholding tax unduly withheld.

We manage the matter from start to finish: we prepare and file the refund claim with the Italian Revenue Agency (Agenzia delle Entrate) and, where the claim is refused or left unanswered, our lawyers pursue it through litigation. 

The engagement begins with a free, non-binding preliminary analysis, through which we assess eligibility and estimate the amount recoverable across the open years. We operate on a full contingent fee basis of the recovered amount, with no anticipated costs, fees or expenses for the client.

For a free, non-binding preliminary analysis, please contact Ellen Grönholm, Legal Counsel, at gronholm@martingalerisk.com.