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Analysing in particular the special cases and international agreements concluded between Italy and other countries, we advise on how they can fulfil their tax obligations in the country where they work or in their country of residence, in order to avoid sanctions Although there is still no capital gains tax at the time of the negotiation of the double taxation convention, the agreement provides: `4. The Convention shall also apply to identical or substantially similar taxes which will subsequently be levied in addition to or in place of existing taxes. At the end of each year, the competent authorities of the States Parties shall communicate any changes to their tax legislation. » BulgariaTax agreements and international agreements The tribunal found that while the agreement applied only to the taxes mentioned in Article 2.3, namely income tax and corporation tax, there was no need for Article 2.2, which considers income taxes. According to the Court of First Instance, Article 2(2), unique to the agreement between Ireland and Italy, shows that the contract was intended to cover taxes on profits from the sale of movable property. If this part of the decision is upheld by the Supreme Court on appeal, it will affect any other agreement before the introduction of capital gains tax. There are ten such treaties, some of which are renegotiated. “Str and LK live together as husband and wife. STR is not recorded on the anagrafe della popolazione. STR wants to sell shares to LK. It will grant LK a loan on the shares.
The proposed transactions were documented by the draft share sale agreement and loan agreement, both of which we reviewed. Judge Kelly explained that the case was due to tax evasion measures on the part of the plaintiff, who, by marriage, is a member of the Ryan family (of Ryanair). The special tax to be avoided was the capital gains tax (CGT). For the avoidance measures to work, it was essential that the double taxation convention (the convention) signed on 11 June 1971 between Ireland and Italy apply to the CGT. There have been disagreements between the parties on this matter. The second issue of decision was the meaning of the concept of `day` referred to in Article 3(1)(e) of the Convention. Justice Kelly said there were two issues of construction and interpretation. To a large extent, if not exclusively, there have been legal issues. In case of double taxation of the same income (between Italy and another country), natural foreign tax relief can be claimed for taxes paid abroad. The exemption can only be invoked if the foreign taxes are paid “definitively” by filing the Italian tax return. Foreign tax relief is calculated according to a specific formula.
The decision of the High Court in Lorraine Kinsella v The Revenue Commissioners (1) concerns the application of the double taxation agreement between Ireland and Italy to Irish capital gains tax, under a regime put in place to avoid it. Lorraine Kinsella, the wife of a Ryanair shareholder, has secured a lease for a small apartment in Italy. In October 2003, she borrowed money from her husband to buy his shares for €18 million, then sold her shares to a third party for €19 million. Kinsella`s tax return was accompanied by doubts as to the application of the Ire-Italian double taxation convention to capital gains tax. In Italy, the risk of double taxation can be combated by several means: as regards the principles of interpretation, Justice Kelly stated that the State had acceded to the Vienna Convention on contract law with effect from 6 September 2006. Even before that event, Barrington J.`s decision in McGimpsey v Ireland I.R. 567 made it clear that, in interpreting an international treaty, the Court interpreted the general principles of international law and, in particular, the general principles of art. 31 and 32 of the Vienna Convention, which must take account of the rules of interpretation of those treaties.