In a virtual signing ceremony on 12 July 2023, Prime Minister and Minister of Finance Daniel Risch and Italian Minister of Finance Giancarlo Giorgetti signed the double taxation agreement (DTA) between Liechtenstein and Italy. The DTA will enter into force once the domestic legislative process is complete. This successful signing of the DTA – which had already been initialled in 2019 – was made possible through the persistent efforts of the Liechtenstein Government and authorities in the interest of the Liechtenstein business location.
The agreement regulates the elimination of double taxation in cross-border scenarios. It is based on the international OECD standard and takes into account the results of the OECD/G20 BEPS project, which aims to combat base erosion and profit shifting in cross-border contexts.
The agreement establishes rules governing the avoidance of double taxation and tax evasion with respect to taxes on income. To promote cross-border investments, a zero rate for withholding taxes is provided for group dividends. The mutual agreement procedure between the two countries also includes an arbitration clause and provides for an additional protocol on arbitration proceedings to resolve difficult double taxation cases. The rules on exchange of information are in line with the international standard and include administrative assistance for enforcement. Automatic exchange of information will continue to be administered via the AEOI agreement between Liechtenstein and the European Union.
This agreement with one of Liechtenstein’s most important trading partners is further evidence of the long-term success of the Government’s Financial Centre Strategy and is an extremely important step in the expansion of Liechtenstein’s DTA network. It increases legal certainty for investments and strengthens cooperation between Liechtenstein and Italy.
