The examination of Ruling No. 66/2026 of the Italian Revenue Agency provides an opportunity to review the taxation rules for fees paid to non- resident artists performing in Italy. This blog post therefore highlights their interaction with international tax law

Foreword

Every opera season, every festival, every tour by an international artist raises the same issue: when an Italian theatre, promoter or production company pays a non- resident artist for a performance in Italy, the 30% withholding tax provided for in Art. 25 of Presidential Decree 600/1973 is almost always applied in full to the gross turnover. This is the safest route for the withholding agent, but it is not always the correct solution – and it often leads to a dispute, either with the artist or with the tax authorities, regarding a claim for a refund.

Ruling No. 66 of 6 March 2026 brought the issue back into the spotlight, clearly confirming that, where the applicable double tax Convention grants taxing rights also to the State where the performance took place, the Italian withholding tax is not refundable. A straightforward principle with significant practical implications: it shifts the focus from the refund stage to the far more delicate stage of classifying the remuneration and directly applying the Convention at the time of payment.

At the same time, the ruling confirmed that the Convention- based refund based on the claim of exclusive foreign taxation of artistic remuneration is, as things stand, a largely futile procedure. The only useful lever is the contractual one – correctly classifying each component of the remuneration prior to payment and directly applying the reduced treaty rates only to those components that qualify. The following sections analyse the three key aspects of the issue, and each conclude with an operational rule.

Note: this article is for information purposes only. The tax treatment of the engagement of a non- resident artist requires a case- by- case analysis, taking into account the text of the specific bilateral treaty and the contractual structure of the transaction.

1. The regulatory framework: three levels

The framework is structured across three levels to be considered together: the domestic rule on territoriality, the domestic rule on withholding tax, and the treaty provision which may mitigate or confirm Italian taxation.

1.1 The Italian source of income

Art. 23(1)(d) of the Italian Income Act (Testo Unico delle Imposte sui Redditi, hereinafter “TUIR”) considers income from self- employment arising from activities carried out within the territory of the State to be generated in Italy. The connecting factor is the place where the service is physically performed: if the artist performs in Italy, the remuneration is of Italian source, regardless of where the contract was entered into, invoiced or paid.

1.2 The 30% withholding tax

Art. 25(2) of Presidential Decree 600/1973 provides that remuneration paid to non- residents for self- employed services is subject to a 30% withholding tax. The withholding tax also applies to services provided in the course of business: a point often overlooked, which becomes crucial when the remuneration is channelled through the artist’s foreign production company.

As this is a withholding tax, and not an advance payment, it fulfils the artist’s Italian tax liability: no subsequent tax return, no adjustment. This explains why a dispute over an excess withholding tax necessarily results in a claim for a refund – and why, as will be explained, the scope for obtaining that refund is narrower than common perception suggests.

1.3 The treaty provision: Art. 17 and right to tax of both jurisdictions

Art. 17 of the OECD Model, which is reproduced with few variations in almost all of Italy’s bilateral treaties, provides that income derived by a performing artist from their personal performances may be taxed in the state where the performances take place. The absence of the adverb ‘shall be‘ is the decisive detail: the convention does not reserve taxation rights exclusively for the State of residence but also grants them to the source State (i.e. where the performance took place). Art. 17(2) further extends the taxing rights of the source state to cases where the income is not paid directly to the artist, but to another person – typically an intermediary company.

The primacy of treaty law over domestic law is enshrined in Art. 169 of the TUIR and Art. 75 of Presidential Decree 600/1973: where the treaty is more favourable, it prevails. However – and this is where Ruling 66/2026 comes in – for the treaty to be effectively more favourable, it must remove taxing rights from Italy. For artists, under Art. 17, this rarely happens.

2. Which activities are covered by the Italian withholding tax?

The first practical issue that the withholding agent must resolve is a prerequisite for the very application of the Convention: does the activity that the non- resident artist is about to carry out in Italy constitute a qualifying performance within the meaning of Art. 17 of the OECD Model Tax Convention, to which the provisions of Art. 25 of Presidential Decree 600/1973 apply? The answer is not always clear- cut, and the Supreme Court has established two principles that should be considered in conjunction.

On the one hand, the Supreme Court’s judgment No. 17955 of 19 October 2012 held that services forming part of an organised artistic or entertainment activity fall within the scope of Art. 25 of Presidential Decree 600/1973, with the consequent application of a 30% withholding tax. This principle applies to typical artistic performances – live performances by musicians, singers, actors, dancers and entertainers – and extends to activities which, whilst not in themselves spectacular, form part of an organised event of that nature.

On the other hand, the Supreme Court judgment No. 21865 of 7 September 2018 clarified – referring to the Commentary on Art. 17 of the OECD Model – that certain professional categories are expressly excluded from the “artistic” scope, such as technical staff (cameramen, directors, choreographers, crew), administrative and support staff. For these individuals, in the absence of a fixed base in Italy, withholding tax is not due because the income falls under Art. 14 of the OECD Model (now incorporated into Art. 7 of the same OECD treaty model), which reserves exclusive taxing rights to the artist’s country of residence unless there is a permanent base in the territory of the source country.

The interpretative value of the OECD Commentary is characterised by the case law of the Supreme Court (Cass. 6242/2020, Cass. 10706/2019) as soft law: non- binding, but relevant for the interpretation of treaties conforming to the Model on the basis of the hermeneutic criteria of the Vienna Convention on the Law of Treaties. For the Italian withholding agent, the operational guidance is straightforward: before applying the withholding tax, the activity must be distinguished between performance- based activities – which is always subject to withholding tax – and technical, professional or support services. The inclusion of the latter in Art. 17 is not automatic.

It is considered that, under current legislation and case law, the Italian withholding agent must apply an asymmetric withholding rule. Where the service is artistic in the strict sense (live performances by musicians, singers, actors, dancers, entertainers), the 30% withholding tax applies. Where the performance involves technical or support staff expressly excluded from the OECD Commentary, the non- application of withholding tax is tenable, provided that the non- artistic nature of the performance is documented in the contract. In all the grey areas in between –  particularly where a hybrid role involves the performance being carried out by a professional in an entertainment context – is advisable to apply the withholding tax and leave it to the artist to seek a refund if necessary: case law on the scope of Art. 17 is far from settled, and the risk of penalties borne by the withholding agent who has failed to apply the withholding tax is significantly greater than the risk of applying the tax in excess.

Summary of the classification of remuneration

Nature of the remuneration	Domestic provision	Tax Treaty provision	Taxation in Italy
Personal artistic performance carried-out in Italy	Art. 23(1)(d) TUIR; Art. 25(2) Presidential Decree 600/1973	Art. 17 OECD Model	30% withholding tax
Image rights ancillary to the performance	Same as above	Art. 17 takes precedence over Art. 12 OECD Model	30% withholding tax
Separate royalties (recording, licensing)	Art. 25(4) of Presidential Decree 600/1973	Art. 12 OECD Model	Conventional rate (typically 5–10%)
Remuneration received through an intermediary company	Art. 25(2) of Presidential Decree 600/1973	Art. 17(2) OECD Model (look- through approach)	30% withholding tax payable in any event

3. Classification of remuneration for tax purposes

Verified that the service falls within the scope of Art. 17, the second operational issue is the classification of the remuneration: is it possible to isolate components of the remuneration – typically image rights or recording rights – and attribute them to other treaty provisions with more favourable rates?

The answer depends, decisively, on the functional link between the single element of remuneration and the performance rendered in Italy.

3.1 Response of Ruling No. 139/2021

An Italian production company engages an actress who is resident for tax purposes in Spain for the filming of a movie in Italy. The contract divides the remuneration into two parts: 60% for the acting performance, 40% for the transfer of worldwide image rights. The applicant requests that Art. 12 of the Convention (royalties) be applied to the second part, with a reduced treaty rate.

The Italian Revenue Agency rejects this approach and classifies the entire remuneration under Art. 17. There are two strands to its reasoning.

The first is territorial in nature: the relevant place for taxation is where the artistic activity takes place – Italy, where the filming occurs – and not the place of commercial exploitation of the image. The second is functional in nature: the contractual structure itself, which separates the service and image rights in a 60/40 ratio, is indicative of the ancillary and instrumental nature of the transfer in relation to the artistic performance. Art. 17, by virtue of its special nature, supersedes any assessment of the applicability of Art. 12.

3.2 The principles: the close connection test and the legal basis

Splitting the remuneration into “performance” and “rights” components is not, in itself, sufficient to exclude the latter income from Art. 17 of the OECD Model. The decisive criterion is the ascertaining of a “close connection” between the income from image rights and the professional performance rendered in Italy, set out in §9.5 of the OECD Commentary on Art. 17 and explicitly referred to by the Agency in the same Ruling No. 139/2021. The “close connection” cannot reasonably be assumed when the income would have been received in the absence of the professional performance, both in terms of timing (the income is generated on the occasion of the Italian performance) and in terms of the nature of the consideration (remuneration is paid for the image of that specific performance, not for an independently transferable asset). In the case of Ruling No. 139/2021, both factors were reported: the actress transferred the rights to the image from the film she was shooting in Italy, and the 60/40 contractual structure itself demonstrated that the transfer was functionally dependent on the performance.

As to why the route of Art. 12 (Royalties) is structurally closed for image rights in the strict sense, it is necessary to add an element of domestic law that Ruling No. 139/2021 elaborates on precisely. Conventions in accordance with the OECD Model define royalties as payments for the use of rights in intellectual property (copyright in literary, artistic or scientific works).

Under Italian law, image rights are not copyright in the technical sense: they are related rights governed by Art. 96–98 of Law 633/1941, which protect the portrait and reproduction of a natural person’s image, not an intellectual work. As they do not fall within the conventional definition of royalties, image rights cannot benefit from Art. 12 even if their transfer were independent of the service. The only component eligible for the reduced conventional rate is the royalty on a pre-existing work (studio master, record catalogue, works recorded in the past): in this case, it concerns copyright in the technical sense, which falls within the conventional definition. The distinction is therefore not merely factual (accessory vs. independent) but also legal: only copyright on pre-existing works falls within the scope of Art. 12; image rights in the strict sense are excluded for structural reasons.

In summary, separate classification as a royalty is considered applicable under the following three conditions: the subject of the transfer must be a copyright in a pre-existing work, rather than an image right in the strict sense; the transfer must generate economic benefit that is unrelated to the specific performance; the contract must document this autonomy through distinct clauses, as well as separately quantified remuneration at market values. If even one of these requirements is missing, according to Ruling No. 139/2021, the entire remuneration could be absorbed under Art. 17 of the OECD Model. It is the legal nature of the asset transferred and the time of its generation – not the formal classification chosen by the parties – that determines the income, so it is irrelevant whether the asset transferred is not a work of intellectual property in the technical sense or whether the functional link with the Italian service is unbroken.

4. The refund of the withholding tax in Italy: scope and limits

4.1 Response of Ruling No. 66/2026

An opera singer resident abroad has signed a contract with an Italian theatre for a number of performances over the course of a calendar year. The theatre applies a 30% withholding tax pursuant to Art. 25(2) of Presidential Decree 600/1973. The artist, who is registered for VAT in his country of residence, considers that, pursuant to Art. 17 of the relevant Convention, the remuneration should be taxed exclusively in his country of residence, and submits a request for a ruling seeking confirmation of exclusive foreign taxation, guidance on the refund of the withholding tax already applied, and procedures for obtaining a prior exemption on future performances.

The Italian Revenue Agency rejects the argument in its entirety and denies the refund. The point is a matter of wording: Art. 17 of the applicable Convention – in accordance with that of the OECD Model – provides that income from artistic performances ‘may be’ taxed in the State in which the activity is carried out. The adverb ‘shall be’ is missing; however, were it present, it would have reserved exclusive taxation rights to the artist’s State of residence. The absence of that adverb establishes a regime of taxing rights for both States, and double taxation is neutralised in the State of residence of the artist. Conclusion: since Italy retains its taxing rights, the withholding tax is due and non- refundable; ex ante non- application for future performances is also not permitted.

A significant detail emerges from the coordination with the Convention applicable to the case at hand: unlike Italy, which generally adopts the tax credit method to neutralise double taxation, the artist’s country of residence adopts the exemption method (Art. 23(3) of the Convention). The opera singer’s income, taxed at 30% in Italy, will therefore be exempt from taxation in his country of residence. This means that the final tax burden on the transaction is the 30% Italian withholding tax, with no further tax liability in the other country – a factor which, from the artist’s perspective, reduces the impact of double taxation but does not eliminate the issue of the Italian tax rate, which remains the highest applicable to non- residents on this type of income.

4.2 Cases where to claim a refund

The treaty refund remains a viable option in specific cases where the withholding tax has been applied on a broader basis or at a higher rate than the Convention provides.

The paradigmatic case is addressed by the Supreme Court’s judgment no 10706 of 17 April 2019, concerning the transfer of the economic exploitation rights to a medical conference: the Italian withholding tax of 30% had been applied to royalties for which the applicable Convention provided for a reduced rate of 5%. It has ecognised the right to a refund of the 25% unduly withheld, confirming that the prerequisite for the refund is not the claim of exclusive foreign taxation, but the incorrect classification of the remuneration or the application of a rate differing from the one provided for in the double tax Convention.

Applying this principle to professional remuneration to artists: the claim for a refund would be successful where the 30% withholding tax was applied to components that should have been subject to the standard rate under Art. 12 (stand-alone royalties). It has no prospect of success when the claim is based on the assertion that Art. 17 imposes exclusive foreign taxation of artistic remuneration.

5. Case study: the French musician’s concert in Milan

In order to translate the principles examined above into a case, consider the following situation. An Italian concert promoter engages a musician resident for tax purposes in France to perform a concert in Milan. The contract comprises three elements: a performance fee of € 70.000 for the live performance; € 20.000 for the assignment of audiovisual recording rights in respect of the concert; and € 10.000 to cover documented expenses (travel, accommodation, and instrument transport). The total gross consideration is € 100.000.

Three scenarios are set out for comparative analysis. In Scenario A, the promoter withholds 30% of the total remuneration. In Scenario B, the promoter applies the 30% on the performance fee under art. 17 and applies the reduced 5% rate under art. 12 of the bilateral tax treaty between Italy and France, which treats recording rights as stand- alone royalties. In Scenario C, the recording rights are found to be functionally connected to the live performance – by the moment that the recording is intended for the commercial exploitation of that specific concert – and are therefore subject to art. 17, in accordance with Ruling No. 139/2021, attracting the full 30% rate.

Item		Scenario A – full withholding tax	Scenario B – correct classification	Scenario C – ancillary royalty
Artist’s fee (Art. 17 OECD)	(A)	€ 70,000	€ 70,000	€ 70,000
Registration fees	(B)	€ 20,000	€ 20,000 (eligible under art. 12)	€ 20,000 (eligible under art. 17)
Reimbursement of documented expenses	(C)	€ 10,000	€ 10,000	€ 10,000
Taxable base (30% withheld)		€ 100,000 (A+B+C)	€ 70,000 (A)	€ 90,000 (A+B)
30% withholding tax (art. 25 of Presidential Decree 600/73)		€ 30,000	€ 21,000	€ 27,000
Withholding tax on royalties (art. 12, rate 5%)		—	€ 1,000	—
Total tax liability in Italy		€ 30,000	€ 22,000	€ 27,000
Difference compared to scenario B		+ € 8,000	reference	+ € 5,000

The case shows two things. Firstly, the correct classification of the remuneration at the time of payment in Scenario B, as opposed to Scenario A, results in an Italian withholding tax of €8,000 on a relatively modest fee. This amount will not be recoverable through the treaty refund mechanism once the full withholding tax has been applied. Secondly, the distinction between Scenario B and Scenario C hinges on the contractual structure and the substantive nature of the transfer. If the subject matter is the recording of the Italian concert, the rights are ancillary and art. 17 applies. However, if the contract separately provides for a licence to use a pre-existing repertoire – studio recordings by the musician that have already been published – that portion constitutes an independent royalty and falls under Art. 12.

6. Operational conclusions

Tax planning for the engagement of a foreign artist in Italy requires the correct classification of the single items of income of the remuneration at the time of contract signing and the direct application by the Italian withholding agent of the reduced treaty rates solely to those components that are substantially eligible. Any other approach, whether involving formal contractual fragmentation or structuring via intermediary companies or refund claims based on art. 17 of the OECD MC, yields marginal returns close to zero in the context of the most recent practice and case law and carries significant risks of tax assessment. The checklist below outlines the operational steps for the Italian withholding agent

The information in this article is intended to provide guidance only. It does not replace a case-by-case analysis, which must consider the applicable text of the specific bilateral agreement, the engagement's contractual structure, and any subsequent developments in practice and case law.

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