Italian Tax Authorities Challenge The Adequacy Of The Italian Permanent Establishments Of Foreign Banks Free Capital


In recent time, Italian tax authorities are becoming more aggressive in challenging the deductibility of interest expenses at the level of Italian permanent establishments (“PE”) of foreign banks.

In principle, Italian permanent establishments of foreign banks are allowed to deduct the amount of passive interest paid on the loans granted by the headquarter. However, Italian Tax Authorities stated that the amount of the free capital assigned to the PE should be “appropriate” under the arm’s length principle, with the consequence that...

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Topics:  EU, Foreign Banks, Loans, OECD, Tax Deductions

Published In: General Business Updates, Finance & Banking Updates, International Trade Updates, Tax Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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