Italy: The updated provisions on the taxation of income distributions from foreign trusts and similar entities residing in ‘privileged tax jurisdictions’

The article provides an in-depth analysis of Italy’s updated provisions, effective late 2019, on the taxation of income distributions from foreign trusts and similar entities residing in ‘privileged tax jurisdictions’. It highlights the Italian Revenue Agency’s efforts to clarify the tax treatment of these distributions, as well as the challenges posed by the deemed-income-characterization provision whereby any distribution made by such trusts and entities is presumed to be income unless the recipient may document the contrary (ie the characterisation as capital). The article provides a thorough overview of the regulatory landscape, highlighting critical areas and addressing interpretative challenges.