UK Company or Owner of an Italian SRL After Brexit: Tax, VAT and Customs

A UK company can own an Italian società a responsabilità limitata (SRL); a UK-resident individual can own one too. Brexit did not make either arrangement impossible. It did change which rules a UK resident can invoke when the SRL distributes profits or a UK business sells goods to Italian customers. The important distinction is between the UK owner's income tax position, the UK seller's VAT position and the origin and customs treatment of goods. A treaty may reduce dividend withholding; it cannot restore eligibility for an EU directive, turn UK shipments into intra-EU VAT supplies or remove customs declarations.

This guide states the position applicable on 27 October 2026, not a prediction of all 2027 rules. The old Italian income-tax code, DPR 917/1986, still applies through 31 December 2026; the replacement in Legislative Decree 117/2026 applies from 1 January 2027 under article 377. Both numbers appear below where we cite a TUIR provision. The Italian VAT text is also due to be reorganised from 2027; have an adviser check the operative citation when filing after that date. Northern Ireland goods can have special arrangements under the withdrawal framework: the examples here concern shipments from Great Britain, and do not purport to resolve Northern Ireland movements.

The short answer

For dividends paid by an Italian SRL to a UK-resident beneficial owner, the Italian starting withholding is 26%. A qualifying UK company controlling directly or indirectly at least 10% of the SRL's voting power can invoke the 5% ceiling in article 10(2)(a) of the UK–Italy income-tax treaty; article 10(2)(b) caps other eligible dividends at 15%. An individual is in that second category. The 5% test is voting power, not merely the percentage of capital and not automatically a one-year holding requirement. A separate, narrower anti-avoidance rule in article 10(9) can affect certain dividends from older profits on newly acquired substantial shareholdings. The paying SRL needs the documentary basis before applying treaty relief at source; otherwise a refund may be claimed.

For VAT, the result depends on what is supplied and who pays the tax, not on UK nationality. An Italian business customer normally self-assesses Italian VAT on a general service from a UK supplier without an Italian intervening establishment. Direct Italian consumer sales from stock already in Italy are different: the supplier generally accounts for Italian VAT. A UK business that needs an Italian VAT position may use direct identification, rather than necessarily appointing a fiscal representative, because the Italian tax authority recognises the VAT assistance protocol in the UK–EU agreement. For imported consumer goods, IOSS remains available for eligible consignments of no more than €150, but that VAT threshold is not a customs duty exemption.

Decision	Applicable UK–Italy route as at 27 October 2026
Dividend to qualifying UK corporate beneficial owner with ≥10% voting control	Treaty ceiling 5%, rather than EU parent exemption
Dividend to UK individual or other eligible UK beneficial owner	Treaty ceiling 15%
UK parent without treaty proof at payment	Domestic withholding 26%; assess treaty refund
UK seller with Italian VAT obligations and no Italian establishment	Direct identification may be used; representation is an alternative
Qualifying UK-origin goods imported into Italy	Claim TCA preference with origin evidence; special 2026 low-value duty rules also matter

What the EU parent relief no longer does

Directive 2011/96/EU applies to distributions between qualifying companies of different EU Member States. Article 5 removes source-state withholding; articles 2 and 3 define eligible companies and holdings. Italy's article 27-bis of DPR 600/1973 requires EU tax residence of the parent. Since the transition ended on 31 December 2020, UK residence alone cannot qualify. Routing a dividend through an EU intermediary does not automatically cure this: the intermediary must itself satisfy the relief conditions, and Directive 2015/121/EU excludes non-genuine arrangements set up mainly to obtain a tax advantage contrary to the Directive's purpose.

Nor can a UK-resident company claim Italy's 1.20% rate by relying on former EU membership. Article 27(3-ter) of DPR 600/1973 limits it to companies and entities resident in specified EU/EEA states and subject there to a corporate income tax, on holdings not connected with an Italian permanent establishment. Article 11 of Decree-Law 38/2026 removed a short-lived 2026 EU/EEA holding/value threshold retroactively; neither version made the UK eligible. The branch-versus-subsidiary guide explains why a branch's internal remittance is not an SRL dividend.

The UK–EU Trade and Cooperation Agreement (TCA) does not itself substitute a dividend withholding exemption for the Parent-Subsidiary Directive. Its relevance here is narrower and concrete: preferential customs treatment for originating goods and the protocol on VAT administrative assistance relied on by the Italian tax authority. The bilateral UK–Italy income-tax treaty, not the TCA, supplies the dividend ceilings. In the Agenzia's Brexit VAT resolution 7/E/2021, the agency expressly treats UK trade as third-country trade from 1 January 2021 and reads the TCA VAT protocol as sufficiently analogous to EU administrative cooperation for direct identification.

Italian SRL dividends: voting power, beneficial ownership and proof

The domestic rule in article 27(3) of DPR 600/1973 covers Italian-source dividends paid to non-residents on participations not connected to an Italian permanent establishment. Its older text still says 27%, but article 3(1), (3), (6) and (7) of Decree-Law 66/2014 set the general dividend rate at 26% for dividends received since 1 July 2014. Agenzia ruling 19/2022 explicitly identifies 26% as the domestic starting rate for UK recipients and quotes the treaty's 15% ceiling for its particular investor facts.

Article 10(2) of the 1988 treaty, published by HMRC as in force, says the source state may tax dividends, but limits it where the recipient is the beneficial owner: 5% for a company controlling, directly or indirectly, at least 10% of the dividend payer's voting power; 15% in all other cases. A UK-resident individual with 100% of the quotas does not become a company: the 15% treaty ceiling, not 5%, is the relevant one. A UK company holding 10% of capital but fewer than 10% of votes cannot simply assume 5%. Conversely the treaty describes direct or indirect voting control; ask an adviser to verify the corporate chain and who beneficially owns the dividend before relying on indirect control.

Article 10(7) removes the dividend-ceiling rule where the participation is effectively connected with a UK recipient's Italian permanent establishment or fixed base. Article 10(9) has a separate targeted limitation: for a beneficial owner holding at least 10% of the relevant class of shares, where the dividend can only come from profits ending at least twelve months before the date that holding reached 10%, and the shares have not been held continuously for twelve months ending on declaration, treaty paragraphs (2)–(4) do not apply to that dividend to the specified extent. The treaty preserves relief if the shares were acquired for bona fide commercial reasons, not primarily to secure the article's benefit. Do not turn this exceptional pair of conditions into a universal twelve-month requirement for 5%.

For an illustration, assume a €100,000 gross Italian dividend with no connected Italian permanent establishment. A qualifying UK corporate beneficial owner with at least 10% voting control and valid treaty documentation has a treaty ceiling of €5,000 Italian withholding; an eligible UK-resident individual has €15,000. Without relief at source, €26,000 would initially be withheld. These are Italian source-tax illustrations, not the owner's final UK tax, and article 10(9), beneficial ownership and documentation must still be checked. Under article 24(2), the treaty addresses UK credits for Italian tax subject to UK domestic credit rules, with an underlying-tax provision for a qualifying UK corporate holding. That provision should not be mistaken for a promise of a UK credit in every case.

Getting the treaty rate rather than paying first and recovering later

The Agenzia delle Entrate publishes a specific agreed UK dividend form as well as universal treaty forms. The UK dividend form and bilingual notes ask for treaty residence, beneficial ownership, voting control where 5% is claimed, the article 10(9) facts, absence of an Italian connected permanent establishment, the Italian payer and the amount withheld. The UK tax authority certifies treaty residence. Its notes say the same form can be sent to the Italian payer before payment for partial relief at source if properly completed and supported; alternatively it goes to the Centro Operativo di Pescara for refund. The form states a 48-month deadline from withholding for the refund claim.

A UK Ltd's certificate of incorporation does not prove all the treaty conditions; a UK individual's passport does not prove treaty residence. Arrange tax-residence certification and ask the payer what evidence it requires before fixing the payment date. Our dividend-withholding guide develops the at-source and refund steps; this article is about the UK-specific treaty tests, not a second set of filing instructions.

VAT for a UK seller: customer status and location come before registration

A general B2B service supplied to an Italian taxable business follows the customer's place of supply under article 44 of Directive 2006/112/EC and Italian article 7-ter of DPR 633/1972. For a UK supplier not making the supply through an Italian establishment, article 17(2) puts Italian VAT on the Italian business customer by reverse charge. The same principle can apply to a sale of goods already in Italy by a non-established UK seller to an Italian taxable customer: Italian territory does not alone mean the UK seller must charge VAT. Property-related services, physical event admission, installation and an Italian establishment that actually intervenes may alter the result. The detailed transaction matrix is in selling into Italy as a foreign company.

Consumers cannot reverse-charge a supplier's Italian VAT. Direct sales from a UK company's Italian stock to an Italian consumer therefore normally require the seller to account for Italian VAT, unless an applicable marketplace deemed-supplier arrangement changes who is liable. Electronic services sold to Italian consumers are also destination-taxed under article 58 of the VAT Directive, but a supplier with neither its business establishment nor a VAT fixed establishment in the EU may use the non-Union OSS for eligible B2C services rather than maintaining a local registration solely for those services. The Commission's OSS registration guidance distinguishes that scheme from the Union scheme for cross-border goods and the import scheme. The €10,000 EU distance-sales simplification depends on establishment in a single Member State; a supplier established in the UK cannot claim it simply because its EU sales are small.

The important UK exception to the fiscal-representative assumption

For a non-resident business needing its own Italian VAT position without an Italian permanent establishment, Italian article 17(3) permits an Italian rappresentante fiscale (fiscal representative) or direct identification when article 35-ter conditions are met. Article 35-ter(5) makes direct identification by third-country businesses conditional on comparable indirect-tax mutual-assistance instruments. The Agenzia's Resolution 7/E/2021 expressly concludes that UK-established VAT taxpayers may use direct identification under article 35-ter as an alternative to appointing an Italian fiscal representative, because the TCA protocol provides sufficiently analogous VAT administrative assistance. Pre-2021 UK Italian registrations or representatives could continue for internal transactions. The earlier Agenzia Brexit FAQ said it would review the agreement and suggested a precautionary representative; it predates and is superseded on this point by the specific February 2021 resolution. Do not repeat the outdated claim that every UK seller must appoint a representative.

This is about ordinary Italian VAT identification, not a guarantee that a UK seller can use every OSS or IOSS registration route without an intermediary. Even direct identification does not make the UK entity EU-established. For a supply falling within Italian article 17(2), an Italian-established business customer remains responsible for reverse-charging the VAT; the UK supplier's Italian VAT registration alone does not change that allocation. The fiscal-representative guide covers appointment and the alternative route; confirm your supply model before either application.

Goods shipped from Great Britain: VAT, IOSS and customs are separate

Sending goods from Great Britain to an Italian customer is an import, not an intra-Community acquisition. The importation ordinarily triggers import VAT; the VAT treatment of the sale depends on who imports, the place of supply, and whether IOSS applies. The European Commission's VAT place-of-taxation guidance distinguishes goods located at dispatch, distance sales of imported goods and importation. A UK supplier should name the importer and destination at checkout, not assume a UK invoice settles the Italian charge.

For eligible B2C distance sales of imported, non-excise goods in consignments with intrinsic value not exceeding €150, the Import One Stop Shop (IOSS) collects destination VAT at checkout and reports it through one Member State; importation is then VAT-exempt under article 143(1)(ca) of Directive 2006/112/EC when the valid IOSS number is supplied to customs no later than the import declaration. Above €150, or without IOSS, use the appropriate ordinary import-VAT route. A seller established in Great Britain without an EU establishment needs an EU-established intermediary to use IOSS. Article 369m(1)(c) allows an intermediary-free route only where the seller is established in a qualifying third country and the goods are dispatched from that same country; the Commission's implementing list names Norway alone, not the UK. Resolution 7/E permits UK businesses to identify directly for ordinary Italian VAT; it does not grant an IOSS intermediary waiver. The intermediary and an Italian fiscal representative are different roles.

€150 is no longer the general customs-duty-free parcel line.

Council Regulation (EU) 2026/382 deleted the old low-value duty relief and, from 1 July 2026 to 1 July 2028, applies a temporary €3 customs duty per item to qualifying consignments not exceeding €150, including IOSS imports and postal consignments. Here an item is not necessarily a single physical product: article 5(78) of Regulation (EU) 2026/2108 groups one or more goods in a consignment sharing tariff classification, description and, where required, origin; the Commission's 5 October 2026 guidance describes collection per customs declaration line rather than per unit. Goods sold under IOSS pay the temporary €3 duty even if they would otherwise have TCA preferential origin; the IOSS customs declaration cannot claim the preferential rate instead. Where IOSS has not been used, a qualifying preference can instead be declared using the appropriate full customs declaration and origin evidence. This duty is separate from VAT. Regulation (EU) 2026/2108, article 20, and Delegated Regulation (EU) 2026/2152, published 22 October 2026, already set a separate €2 per item Union handling fee for qualifying distance-sale imports from 1 November 2026, regardless of the goods' value. Check whether each parcel falls within its scope. Separately, Italy's €2 contribution per qualifying low-value shipment, set out in the Agenzia delle Dogane's explanation of Law 199/2025, article 1(126)–(127), does not apply before 1 January 2027 under Decree-Law 193/2026, article 1(3)–(4); this national levy is not the EU handling fee.

The TCA origin procedure guidance issued by the Commission says zero tariffs and quotas apply to goods meeting the relevant UK or EU origin rules, not to every parcel merely shipped from the UK. For an Italian importer's preferential claim the basis is an exporter statement on origin or importer's knowledge. A UK warehouse reselling goods chiefly manufactured elsewhere does not create UK origin. For each product, establish the origin rule and evidence, customs classification and importer; compare the preference with the special low-value regime and any applicable import VAT. This is also why an IOSS number is not a certificate of preferential origin.

Directors in Italy: residence of the UK company versus its Italian subsidiary

Italian article 73(3) TUIR — article 82(3) of Legislative Decree 117/2026 from 1 January 2027 (official new text) — treats a company as Italian-resident where, for most of the tax period, it has in Italy its registered office, place of effective management (sede di direzione effettiva) or principal ordinary management (gestione ordinaria in via principale). The strategic test means continuing, coordinated decisions about the company as a whole; ordinary management concerns continuing, coordinated day-to-day acts about the company as a whole. The Agenzia's Circular 20/E/2024 cautions that non-managerial shareholder oversight is not itself effective management and actual location needs a case-by-case assessment.

This risk concerns the UK company itself, not the ordinary fact that it owns a resident Italian SRL. There is a further rebuttable Italian presumption in article 73(5-bis) TUIR, renumbered article 82(6) from 2027: a foreign company holding a controlling participation, within Civil Code article 2359(1), in a specified Italian-resident corporate or commercial entity is presumed Italian-resident, unless it proves otherwise, when the foreign company is controlled, directly or indirectly, by Italian-resident persons or its board (or equivalent management body) has a majority of Italy-resident members. Under old article 73(5-ter), new article 82(7), the control facts are tested at the end of the foreign company's accounting or management period; for individuals, relevant family members' voting rights count too. An Italian subsidiary alone does not trigger the presumption. HMRC's company-residence guidance recognises UK incorporation or UK central management and control as domestic UK-residence routes. If the same company meets both countries' domestic tests, article 4(3) of the UK–Italy treaty points, for a dual-resident non-individual, to the place of effective management. A UK-registered address, an Italian director's home and a board minute are evidence, not automatic answers. Map who genuinely decides strategy, where they do it, and where the continuing ordinary acts occur. The treaty separately says that ownership of a subsidiary alone does not constitute a permanent establishment (article 5(6)); actual UK-company operations in Italy require their own article 5 review. Article 16 permits Italy to tax a UK resident's fees as director of an Italian-resident company: keep directors' pay separate from dividends and from the company's residence test.

UK CFC: a review, not an automatic charge

If the UK parent controls the Italian SRL, UK controlled foreign company rules may enter the analysis. Part 9A of TIOPA 2010 defines a CFC as a non-UK-resident company controlled by UK residents; section 371BA charges only profits that pass the CFC charge gateway when no full entity exemption applies. Section 371BD requires at least 25% of the CFC's chargeable profits to be apportioned to the relevant UK company and connected or associated persons before that company is chargeable; this is not simply a 25% share-capital test. HMRC's overview focuses on profits artificially diverted from the UK, not mere foreign ownership. A UK adviser must determine whether a particular Italian SRL passes the gateway or qualifies for an exemption. An individual shareholder is not, merely by holding shares, the UK corporate chargeable company described in these rules; the old HMRC list giving Italy excluded-territory status concerns accounting periods before 2013, not a current blanket exemption.

What this guide does not cover

This is not a UK personal dividend-tax calculation, an Italian SRL incorporation manual, a complete customs tariff schedule, or advice on Northern Ireland's separate goods arrangements. It does not decide whether a specific UK Ltd is UK or Italian resident, whether the presumption for foreign parents controlled by Italian-resident persons or managed by a majority Italy-resident board is rebutted, whether a holding is beneficially owned, whether an Italian stock or director creates a taxable establishment, or whether a UK CFC exemption applies. Before paying a dividend or sending the first shipment, an Italian tax professional should check the SRL's documents and voting rights, the recipient's UK treaty-residence certificate and beneficial ownership, any connected Italian establishment, the exact VAT supply and importer, product origin/classification, the applicable EU and Italian fees and which 2027 statutory citations apply at the transaction date. A UK adviser should check UK tax credits, corporate residence and CFC gateway/exemptions.

Primary sources

• UK–Italy income-tax treaty (HMRC official text), articles 4, 5, 10, 16 and 24; Agenzia's UK-specific dividend form.
• Directive 2011/96/EU, articles 1–5; Decree-Law 66/2014, article 3; Agenzia ruling 19/2022.
• Agenzia Resolution 7/E/2021 on UK direct VAT identification; Commission Decision 2021/942 on intermediary-free IOSS country.
• Regulation 2026/382 on €3 duty; Regulation 2026/2108, articles 5 and 20, and Delegated Regulation 2026/2152 on the €2 handling fee; Commission customs guidance; TCA origin guidance; Italian low-value contribution deferral to January 2027.
• Agenzia Circular 20/E/2024 on residence; Agenzia ruling 27/2022 on the parent-company presumption; new TUIR article 82; UK CFC legislation.

FAQ

Does Brexit stop a UK company owning an Italian SRL?

No. The issue here is how the UK owner's dividends, Italian sales and management are taxed, not a prohibition on UK ownership. The Italian SRL incorporation guide deals with the company-formation steps.

Is the UK corporate treaty rate 5% whenever the parent owns 10% of the SRL?

Not necessarily. Article 10(2)(a) tests voting control of at least 10%, direct or indirect, by a company that beneficially owns the dividend. Treaty residence, a participation effectively connected with an Italian establishment, the article 10(9) anti-avoidance case and proof at payment can change the outcome. A 10% capital holding alone is insufficient evidence of 10% voting power.

Does the UK–EU TCA make Italian dividends or imports tax-free?

No. Italian dividend withholding is governed by Italian domestic law and the UK–Italy income-tax treaty. The TCA's goods rules allow a qualifying origin-based preferential customs claim, while the 2026 temporary low-value duty and import VAT are distinct charges. The TCA's VAT assistance protocol is what underpins the Agenzia's UK direct-identification ruling.

Should a UK business register for Italian VAT on its first Italian customer?

Not without classifying the supply. A general service to an Italian taxable business normally puts VAT on that customer through reverse charge. Direct consumer sales from Italian stock commonly require the seller to account for Italian VAT; direct identification is available to a UK-established seller under Resolution 7/E/2021. Ask for a transaction-by-transaction VAT assessment.

Does a UK parent automatically owe UK CFC tax on its Italian SRL?

No. Part 9A TIOPA 2010 requires a UK-controlled foreign company, profits passing the statutory gateway, no applicable full exemption and a chargeable UK company with the requisite interest. UK ownership alone does not establish all those facts.

If you need the Italian side of a UK ownership or sales model reviewed before payment or shipment, you can request an Italian tax quote. Include the ownership chart, proposed dividend date, product origin and customer/importer flow so that the review starts with the actual transactions.