As of: July 2026 · Part 4 of the series “Reclaiming Withholding Tax” · Giulia Uggias-Sproß, Steuerberaterin (M.A. Taxation)
Italy withholds 26% withholding tax on dividends — 11 percentage points of it are reclaimable, but processing takes years. How the procedure works and when it can be avoided altogether.
Example — gross dividend of €5,000 from Italian shares:
Without a reclaim your total burden is well above what a domestic dividend would incur. The 11 percentage points are not a tax you owe — they are an interest-free loan to the Italian state with an indefinite term.
On interest and capital gains Italy levies no withholding tax on non-residents. This article concerns dividends only.
The application is possible within 48 months from the day of the tax deduction (Art. 38 DPR 602/1973). This is where many miscalculate: the deadline runs to the exact day from the deduction, not until year-end. Withholding tax deducted on 15 May 2022 is reclaimable up to 15 May 2026 — not until 31 December 2026.
Anyone tying the deadline to the calendar year miscalculates by up to eleven months — and with several distributions in a year, each has its own expiry. The real problem lies at the other end anyway: after timely filing a processing time begins that regularly stretches over several years. Anyone applying in 2026 for 2022 can realistically expect a payout well after 2028.
Practical consequence: apply early, not at the last minute. Using the deadline here costs you not certainty but years.
The last point is not irony. Expect to keep an eye on the matter across several tax years.
Some custodian banks offer an advance reduction for Italian dividends: the broker reports your treaty entitlement in advance, and only 15% is withheld from the outset.
If your broker supports this, the matter is settled — no reclaim, no waiting, no open items over years. If not, that is a serious argument when choosing a custodian, provided you intend to hold Italian dividend stocks permanently.
The concrete question to your bank is: Do you offer advance withholding-tax reduction to the treaty rate for Italian dividends? Not: Do you take care of the withholding tax? The second question is regularly answered with a meaningless yes.
Refund and credit are confused. The two parts concern different tax authorities and must not be mixed. Creditable in Germany are only the 15 percentage points Italy may keep under the treaty. The 11 percentage points above that are from the outset not creditable in Germany — they are subject to a refund claim against Italy (§ 32d para. 5 EStG) and must be recovered there, otherwise they are finally lost. Anyone trying to credit the full 26 points in Germany calculates incorrectly; anyone not reclaiming the 11 points in Italy gives them away. The refund by Italy changes nothing about the 15 creditable points, because these two amounts do not overlap.
Anlage KAP is forgotten with foreign custody accounts. With domestic accounts the bank usually applies the creditable withholding tax automatically. With foreign accounts it does not — there you must declare it yourself. Anyone who omits this loses the 15 points on top of the 11.
Each distribution is applied for separately. Within the four-year deadline several years can be bundled. Given Italy’s processing time, that is not a convenience but a necessity.
The application is filed and then forgotten. With processing times of several years, an open refund claim regularly disappears in private files — especially on a change of custodian, a move or in an inheritance. Keep the matters traceable.
Italy, as an EU member state, falls under the EU directive on withholding tax relief, which from 1 January 2030 provides for standardised procedures — relief at source or a fast-track procedure with a limited processing deadline. For a country with the current processing times, this is the most relevant development of all. For the years up to 2029 it changes nothing.
Italy is the country in this series where professional support is most likely to pay off — less because of the application than because of the tracking over years and the clean interlocking with the German Anlage KAP.
G-Tax Consulting advises on international tax law and the taxation of investments with cross-border ties. We advise in German, English, Russian and Italian.
This article reflects the legal situation as of July 2026 and does not replace individual tax advice.
