Treaty between Italy and Belgium – Italian tax authority rules on tax qualification of payments under non-competition agreement

On 10 June 2008, the Italian Tax Authority (ITA) issued Resolution No. 234 aimed at providing clarification with regard to the tax treatment of payments made to non-resident employees in connection with a non-competition agreement.

(a) Facts. An Italian company (the Company) carries on its chemical and pharmaceutical business in 50 countries through 400 subsidiaries. The Company has 30,000 employees, who may be seconded to subsidiaries in different jurisdictions. Due to the know-how deve…