The Italian Financial Ministry officially confirmed that the 20% withholding tax on some foreign incomes has been suspended until 1st July 2014.
Any tax already withheld will be returned directly to taxpayers by the banks.

This withholding tax was introduced with art. 4, par. 2 DL 167/1990 (as modified by art. 9 par.1 L. 97/2013). This law establishes that incomes coming from assets or financial investments held abroad are subject to 20% withholding tax applied by any Italian bank or other Italian financial intermediary that intervenes in the collection of such incomes. Specifically, incomes subject to this new 20% withholding tax are:

  1. With regard to savings incomes: interest from mortgage agreements, non-bank accounts agreements, remuneration from guarantees, irredeemable annuities and other gains from capital investments.
  2. With regard to “redditi diversi” (or other incomes): capital gains from the sale of foreign property (held for more than five years), from the sale of construction-ready land located abroad, from the sale of shares (that make up more than 20% of the capital) and incomes from other foreign real estate.

Milan, 20th February 2014

The Italian Tax Agency suspends the 20% withholding tax on foreign incomes