Some U.S. pension funds – assisted by Tremonti Romagnoli Piccardi e Associati, with partner Cristiano Caumont Caimi and associate partner Anna Maria Gulino, supported by Annunziata & Conso, with the of-counsel Patrizio Braccioni – won over the Revenue Agency before the Supreme Court in some judgments on the refunding of withholding taxes paid on dividends.

More specifically, the U.S. pension funds had claimed the refund of the difference between the withholding tax incurred on Italian-source dividends at the conventional rate of 15 percent/at the domestic rate of 27 percent and the substitute tax at the rate of 11 percent ordinarily applied to the Italian pension funds on the net income earned.

The Supreme Court, with statements no. 25691, 25692 and 25963, June 10, 2022 – September 1 and 2, 2022, according to the thesis recently expressed in relation to investment funds, firstly noted, with specific reference to non-EU pension funds, that the different treatment between U.S. pension funds and Italian pension funds may hinder investments, thus resulting in a restriction on the free movement of capital, ordinarily prohibited with respect to non-EU countries according to Article 63, TFEU.

Given the above, the Supreme Court, according to the CJEU’s case law, stated that this results in a restriction which cannot be justified under Article 65 TFEU, neither by referring to general interest nor to objective differences between the two cases (in terms of supervision and taxation of funds).

In this respect, the Supreme Court made it clear that the fact that the regime applicable to U.S. funds provides for a tax levy only at the time of the payment of pension benefits (under the “E-E-T” scheme), while Italian funds are also taxed on income at the time of its production (under the “E-T-T” scheme), cannot be considered an element capable of justifying the different tax treatment. The Italian law, following the EU infringement proceedings, has extended the domestic tax rules to EU funds resident in states where the “E-E-T” taxation scheme is also applied, thus demonstrating that it does not consider it a circumstance hindering the equalization of foreign funds with Italian ones.