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Taxation envisaged on income fees arising from professional services of a US director -for the direction of a TV series set in Italy

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The answer to interpello (Question) No. 129 of 20 January 2023, issued by the Agenzia delle Entrate, offers an explanation on the taxation to be applied on payments made by an Italian film company to a US partner company, fully owned by a US-based director; the Italian Tax Agency confirms that the payments should be taxed in the US only.

The answer includes two relevant aspects:

  1. The ‘objective’ nature of the services performed by the directors and
  2. The implications of the ‘interposition’ of the one-man partnership.

What does national tax law establish?

According to the Italian domestic tax rules and regulations, being the director’s work a professional service provided in Italy by a non-tax resident (the director is a US resident, since his vital interest centre is located in the US), his fees should be subject to a 30% tax withholding, as per Art 25, para 2, Presidential Decree N.600/1973.

Italy USA Treaty against double taxation

After having considered the national rules and regulation, the answer takes into consideration the provisions envisaged by the international Convention between Italy and the United States to avoid double taxation – since it is generally accepted by Italian Laws the principle of predominance of international Conventions over domestic laws as far as taxation is concerned– as per Art. 169 of TUIR (Unified Law on Income Tax) and Art. 75, Presidential Decree N.600/1973.

The Tax Agency underlines that professional fees should be taxed in the country of residence of the professional (in this case, in the US), provided that the same professional does not have a fixed operating base in the other country considered (in this case, the director does not have an operating base in Italy).

As a result, according to the answer provided by the Tax Agency, the professional services provided by the Director are to be considered within the scope of application of Art.14 -Personal services in an independent capacity- and not in the scope of Art 17- Artists and Athletes, of the said Convention. Art 17 in fact, notwithstanding the provisions of Art 14, indicates that such activities may be taxed in the other State (in this case, in Italy) even if the professional does not have a fixed operational basis in the country.

In fact, the Commentary to Art 17 of standard OECD model convention defines “Artists” people who enjoy a direct presence recognizable by the general public (actors, as far as the movie sector is concerned), but does not refer to people of the administrative or support staff, including directors and other professionals.

About the foreign partnership

Answer N.129/2023 also underlines the relevance of the foreign partner company which receives the payment from the Italian distribution company.

In the case at hand, the director is a US tax resident and operates in Italy on behalf of a US company, which could be considered as a partnership company (società di persone) by the Italian tax law; the director is the sole partner of the said American company and the company’s scope is to provide the director’s professional services to customers.

Answer 129/2023 simplifies the issue at hand, as far as business relations with the US are concerned; the Convention against double taxation in fact defines a partnership company as tax resident, within the scope of the convention, as long as the income from foreign sources is liable to taxation and taxes are levied on the company or on her shareholders under a transparency regime.

Applicability of the Italy-US treaty against double taxation

As a result, the taxpayer subject to taxation (in the US) is entitled to benefit from the provisions of the Convention, thus avoiding, in the present case, to be submitted to Italian taxation.

Therefore, whenever the foreign partnership company is considered, in her country of residence, a transparent company, i.e. the income tax is levied on the shareholders, the benefit of the Convention applies to the partner/s of the company itself – in this case, the director.

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Regulatory Framework

Answer n. 129/2023


Convention Between the Government of the United States of America and The Government of the Italian Republic for the Avoidance of Double Taxation with Respect to Taxes on Income and the Prevention of Fraud or Fiscal Evasion


Art. 23, Presidential Decree, 22 December 1986, N. 917


Art. 25, para. 2, Presidential Decree N. 600/1973


Art. 169, Presidential Decree 22 December 1986, N. 917


Art.75, Presidential Decree N. 600/1973


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