The team at Morri Rossetti continues to excel in Italy and Internationally
As part of its ongoing three-year growth strategy, Morri Rossetti & Franzosi is strengthening the Tax department with the appointment of lawyer Antonello Lops as Director. Lops brings extensive experience in the taxation of investment funds, real estate, private equity transactions, and wealth planning.
A seasoned tax lawyer, Lops has advised both domestic and international clients on the structuring of real estate and securities funds, private equity and private debt taxation, corporate reorganizations, executive incentive plans, and estate and succession planning. He also provides counsel in tax audits and litigation proceedings.
Alongside his professional practice, he has taught national and international tax law in several master’s programs at the 24ORE Business School.
"Antonello’s addition marks another key step in the consolidation of our tax practice, which has seen steady growth in expertise, size, and deal volume in recent years," said Davide Attilio Rossetti, Senior Partner at the firm. "His background, particularly in financial taxation, aligns perfectly with our firm's needs and strategic development plans."
Morri Rossetti & Franzosi has been included among the “highly recommended” firms in several areas in the Legalcommunity Tax Report 2025, which analyzes the activity and performance of Italian law firms operating in the tax sector.
The firm’s profile is described in the report as follows:
“The team offers expert tax guidance on M&A and extraordinary transactions, litigation, VAT, and indirect taxes, leveraging strong analytical skills to deliver strategic and efficient solutions.”
The firm is recognized in five practice areas, and five professionals stood out over the past year for their contributions in their respective fields.
The full report is available here: Legal Community Report
abstract: With its ruling no. 4427/2025, the Italian Supreme Court reaffirmed the centrality of the look-through principle toward the beneficial owner of income, even in the presence of interposed vehicles.
The Court confirmed the applicability of the exemption under Article 26, paragraph 5-bis, of Presidential Decree no. 600/1973 to financing arrangements indirectly granted by qualified foreign entities. This approach, aligned with the “Danish cases” of the CJEU and the OECD Model, may also apply to dividend distributions in favour of EU/EEA UCITS. International tax treaties and administrative practice further support this substantive interpretation, aimed at preventing abuse and double taxation by giving importance to the actual ownership of income flows.
The application of the look-through approach under this exemption regime was introduced judicially by the EU Court of Justice (CJEU) in cases C-116/16 and C-117/16 and in joined cases C-115/16, C-118/16, C-119/16, and C-299/16 (collectively referred to as the “Danish cases”).
Particularly significant is the CJEU’s statement in the joined cases C-115/16, C-118/16, C-119/16 e C-299/16, where the Court held: “it should also be stated that the mere fact that the company which receives the interest in a Member State is not its ‘beneficial owner’ does not necessarily mean that the exemption provided for in article 1(1) of Directive 2003/49 is not applicable. It is conceivable that such interest will be exempt on that basis in the source State when the company which receives it transfers the amount thereof to a beneficial owner who is established in the European Union and furthermore satisfies all the conditions laid down by Directive 2003/49 for entitlement to such an exemption”.
In other words, the CJEU expressly allows the application of the look-through mechanism when the first recipient lacks the necessary characteristics to qualify as the beneficial owner and the income flow is transferred to another group entity that qualifies as the beneficial owner and meets the other requirements of the relevant EU directive.
The conclusions reached by the CJEU in the above judgment, although related to the exemption from withholding on interest and royalties under Directive 2003/49/EC (“Interest and Royalties Directive”), are clearly extendable to the Parent-Subsidiary Directive, given the similarity of the legal frameworks, especially considering that the Interest and Royalties Directive explicitly limits the exemption to cases of direct shareholding.
Despite this upward trend, consultancies face substantial challenges. The political landscape in Spain remains unstable, with frequent government transitions, regional tensions—particularly in Catalonia—and evolving fiscal policies contributing to uncertainty for businesses and their advisors. Economic volatility, reflected in inflation, fluctuating demand, and external shocks, requires consultancies to continually adapt their strategies and resources to support clients effectively.
The case involved an Italian company that requested the reimbursement of withholding taxes paid on interest related to a loan it had received from its Luxembourg-based parent company. The parent had in turn sourced the funds from a Luxembourg investment fund, the actual lender and beneficial owner of the interest, and an entity qualifying for exemption. The Italian company had initially exempted itself from withholding under article 26-quater (implementing Directive 2003/49/EC) but later paid the taxes voluntarily following a tax audit and subsequently sought a refund. After two lower-court rulings in favour of the taxpayer, the Supreme Court rejected the Revenue Agency’s appeal, affirming the primacy of the “beneficial owner” concept over the “direct recipient,” consistent with the OECD Model and the principle of ability to pay.
The principle established by the Supreme Court is of critical importance, as it may also apply to dividend distributions to UCITS established in EU or EEA countries. In such cases, the exemption under article 27, par. 3 of Presidential Decree 600/1973 is often denied by the tax authorities when the investment is made “indirectly” through interposed vehicles. However, the Supreme Court rejected a purely literal interpretation similar to the one often used to deny dividend exemptions, highlighting that article 27(3) adopts the same wording as article 26(5-bis). In line with the OECD Model, tax benefits should be granted to the beneficial owner, even if dividends are received via an interposed entity, by applying the look-through mechanism.
Unlike the regime under the Parent-Subsidiary Directive, tax treaties (in line with the OECD Model) expressly allow the application of the look-through approach. For example, article 10 of the Italy–UK tax treaty states: “Dividends paid by a company which is a resident of a Contracting State to a resident of the other Contracting State may be taxed in that other State. However, such dividends may also be taxed in the Contracting State of which the company paying the dividends is a resident and according to the laws of that State, but if the recipient is the beneficial owner of the dividends the tax so charged shall not exceed: 5% of the gross amount of the dividends if the beneficial owner is a company which controls, directly or indirectly, at least 10% of the voting power in the company paying the dividends […]”.
In other words, the treaty allows the application of the reduced 5% withholding rate even when entities interposed between the payer and the beneficial owner are involved, provided that such interposition does not result in an abusive tax advantage.
This interpretation is confirmed by the practice of the Italian Revenue Agency, which has consistently acknowledged the operation of the look-through mechanism in treaty contexts (see, among the earliest rulings, Resolutions no. 431/1987 and no. 86/2006). This position has also been reaffirmed recently in Italian case law[1].
The look-through principle, focused on identifying the beneficial owner of income flows, remains a key instrument for a purposive application of the Parent-Subsidiary Directive and for preventing abuse or double taxation. The development of both European and national case law, particularly the recent shift by the Supreme Court, shows that a purely formal evaluation based on the direct recipient and the literal text of domestic provisions is no longer sufficient. Therefore, even where interposed vehicles are involved, withholding tax exemptions should be granted where the beneficial owner meets the relevant legal requirements.
[1] See, inter alia, Italian Supreme Court, Civil Section V, 30 September 2019, no. 24288. More recent references to the look-through approach in national case law can be found in Supreme Court, Civil Section V, no. 521/2024, where it is stated that: “according to the Court of Justice, it is possible to assess whether the third-party company for which the conduit entity acts meets the conditions to benefit from the exemption regime [rectius: preferential/reduced tax treatment] under the treaty (…) and, if so, the tax benefit must be granted (the so-called look-through approach)”. See also Regional Tax Court of Second Instance of Emilia-Romagna, judgment no. 929/2023.
abstract: In the decision of 3 April 2025, case C-228/2024, the EU Court of Justice (CJEU) provided significant clarifications regarding the scope of application of the anti-abuse clause of Directive 2011/96/EU (the so-called "Parent-Subsidiary Directive"), stating that, for the purposes of disapplying the dividend exemption regime provided by the Directive, the mere classification of a subsidiary as a non-genuine arrangement is not sufficient, as it is also necessary to demonstrate the existence of an abusive practice aimed at obtaining a tax advantage contrary to the purpose of EU law.
The case concerned a dispute between a company established in Lithuania and the Lithuanian State Tax Inspectorate, which had denied the company the corporate tax exemption on dividends received in 2018 and 2019 from its UK-based subsidiary, classifying the latter as a “non-genuine arrangement” pursuant to anti-abuse legislation.
According to the Inspectorate, the subsidiary lacked a genuine economic presence in the UK: it did not have an operational headquarters, tangible assets, or adequate staff (except for a director who was also active in other companies). In fact, the development and distribution of video games were carried out directly by the Lithuanian parent company.
The latter contested this conclusion, arguing that its subsidiary had a real economic function (i.e., acting as intermediary with distribution platforms) and pointing out that it did not benefit from any tax advantage, as the UK corporate tax rate (24%) was higher than that of Lithuania (15%).
The national court referred three questions to the CJEU, concerning:
As regards to the first question, the Court held that the anti-abuse clause set forth in Article 1(2) and(3) of the Parent-Subsidiary Directive does not preclude Member States from denying the dividend exemption to a parent company even where the subsidiary is not a “mere conduit” company, and the profits derive from the subsidiary’s own activities. However, that exclusion is permissible only where the essential elements of an abusive practice are met, namely when the structure is non-genuine and lacks valid economic reasons reflecting the substance of the transaction.
As to the second question, the Court clarified that it is not consistent with the purpose of the anti-abuse clause to limit the assessment solely to the circumstances at the time of dividend distribution. Rather, it is necessary to consider all the relevant facts and circumstances, including any developments occurring after the incorporation of the subsidiary, to determine whether a given phase of the arrangement is to be regarded as artificial.
In other words, even an initially genuine arrangement may become artificial over time if it is maintained despite a change in the original circumstances. Consequently, an administrative practice that restricts the assessment to the date of dividend distribution is incompatible with EU law.
With respect to the third question, the Court clarified that two cumulative conditions must be met in order to deny the tax exemption provided by the Directive: on the one hand, the existence of a non-genuine arrangement, that is a lack of valid economic reasons and real economic substance; on the other hand, the main purpose (or one of the main purposes) of the artificial arrangement must be to obtain a tax advantage contrary to the purpose of the Directive.
It follows that the mere absence of economic substance is not sufficient to establish an abuse of rights: there must also be a subjective intention to obtain an undue tax advantage. According to the Court, that advantage cannot consist merely in the dividend exemption as provided for in the Directive but must involve a tax saving considering the differences in tax rates between the Member States of the parent and subsidiary companies.
The decision is part of a consolidated line of case law concerning abuse of law in taxation, and represents a further step in defining the delicate balance between the right of establishment and the need to counteract abusive practices.
From an operational perspective, the principles laid down by the CJEU require EU corporate groups to: properly document the economic and commercial reasons underlying the establishment of foreign subsidiaries; ensure that subsidiaries have an effective economic substance, in terms of human resources, material infrastructure, and operational autonomy; continuously monitor the adequacy of existing structures, also taking into account any changes in the original circumstances.
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