Among the countries Singapore signed double taxation agreements with is also Italy. The two states have signed their first double tax treaty in 1975 and enforced it in 1979, which has led to large number of Italian investors seeking to open a company in Singapore. The last amendment to the Singapore-Italy double tax treaty was brought in 2012. The convention covers both natural and corporate entities with tax residency in Singapore and Italy. The Singapore-Italy agreement for the avoidance of double taxation covers the following taxes:
- – the Singapore income tax;
- – the Italian income and corporate taxes;
- – similar taxes imposed by both countries.
How does the avoidance of double taxation occur in Singapore and Italy?
In order to avoid double taxation, the treaty between Singapore and Italy defines several terms which will help the authorities of each country to assess the taxation of Italian and Singapore companies conducting commercial activities in the other country. For this purpose, the term permanent establishment designates branch offices and subsidiaries of Italian and Singapore companies in the other state. Permanent establishments will be taxed in the country where they offer their services or sell their products. With respect to individuals, they will be taxed in the country where they work or offer their services. The income resulted from real estate property will be taxed in the country where the property is located. In situations where an income is taxed twice, the Singapore-Italy double taxation treaty provides for the taxpayer to be reimbursed the amount paid through allowances, tax credits or tax deductions depending on the type of income. For more details about the provisions of this double tax treaty, do not hesitate to get in touch with ourteam who is also able to help you open a company in Singapore.
Special tax rates under the Singapore-Italy double tax treaty
There are certain types of incomes which benefit from reduced tax rates under the Singapore-Italy double taxation agreement. These are dividends, interest and royalties payments which are taxed as it follows:
- – a 10% tax rate on dividend payments;
- – a 12.5% tax rate on interest payments;
- – a 15% tax rate on the use or copyright, patents, trademarks and industrial designs, and a 20% tax rate from intellectual property rights deriving from the use of artistic work, such as films, music, TV or broadcasting.
For complete information on the provisions of the double tax agreement with Italy, please contact our company formation representatives in Singapore.