Italy Tax Agency Clarifies Taxation of Judicial Settlement Amount, Nonresident Income

The Italian Revenue Agency Dec. 9 published Letter Nos. 578, clarifying the application of withholding taxes on amounts received from a judicial settlement. An Italian company and a nonresident employee signed a judicial conciliation report following the employee’s termination. In 2019, the company made payments under a pre-established payment agreement. The parties inquired as to the taxation of the nonresident’s income and the settlement payment. The agency clarified that: 1) the settlement payment is subject to Italian advance withholding taxes since the company providing the amount is a tax resident of Italy; 2) the nonresident income stipulated in the pre-established ...