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Qualification of fees for the use or concession in use of software

The Italian Revenue Agency clarifies the criteria for categorising remuneration for the use or concession in use of software, based on the OECD Model.

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Principle No. 5 published by the Agency on 20 February 2023 is of undoubted relevance, as it clarifies the criteria for the classification of remuneration paid for the granting of the right to use, reproduce and distribute software for the purposes of the application of double taxation treaties.

The Italian Revenue Agency publishes a principle of law in cases where a full response to the requests may be materially prejudicial to public or private interest. However, it is considered that the response provided contains new interpretative clarifications that may ensure greater uniformity of conduct in the internal system.

The principle of law reiterates what the process is for placing income within the categories provided for in the Conventions.

Article 3 of the OECD Model

Article 3 of the OECD Model provides that for the application of the Convention by a Contracting State, any term not defined therein shall have the meaning which is given to it by the law of the Contracting State at the time, unless otherwise requested by the context.

Therefore, in this specific case, the Italian Revenue Agency has considered that there is no explicit definition of the category of income in question within the bilateral Convention. Thus, as provided for by Article 3, the Agency proceeds to identify the category according to Italian domestic law.

Categorisation in Italy

As regards taxation in Italy, the Italian Revenue Agency points out how the remunerations subject to the request for ruling are protected by copyright law (see Law No. 633 of 22 April 1941). The Consolidated Income Tax Act, approved by Presidential Decree No. 917 of 22 December 1986 (hereinafter TUIR), states that the remuneration received for the use of such works is deemed to be produced in the State if paid by resident subjects or by permanent establishments of non-resident entities (Article 23(2)(c)). In addition, Article 25 of Presidential Decree No 600/1973 provides that the same fees are subject to a 30% withholding tax on the taxable part of their amount, if paid to non-residents.

Then, it is necessary to verify the coordination of the domestic legislation with the conventional one, considering that the latter prevails over the former, as established in domestic law by Article 169 of the TUIR and Article 75 of Presidential Decree No. 600 of 1973.

Article 12 of the OECD Model

In relation to creative works, reference should be made to the article on ”Royalties” which in most of the treaties concluded by Italy corresponds to Article 12. This article includes among ”Royalties” the remuneration paid for the use or the concession in use of a copyright on literary, artistic or scientific works.

More specifically, the Commentary to Article 12 of the OECD Model clarifies that rights in computer programs represent a form of intellectual property. Moreover, payments made for the acquisition of partial rights in copyright (without the transferor totally alienating the copyright) represent a royalty for which the consideration is recognised for the grant of the right to use the program in cases where the use of the program would constitute an infringement of copyright.


In conclusion, the Agency considers that it has identified the category in accordance with the general principles set out earlier in this article. Therefore, the granting of the right to use, reproduce and distribute software, in cases where such acts would constitute an infringement of copyright, must be placed in the article relating to ”Royalties”, provided for in the Conventions concluded by Italy for the purposes of verifying the allocation of taxing powers.

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Regulatory Framework

Article 23 of the TUIR


Article 169 of the TUIR


Law No. 633 of 22 aprile 1941


Article 23 of Presidential Decree No. 600/1973


Article 75 of Presidential decree No. 600/1973


Principle of law No. 5/2023


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