The Notions of “Beneficial Ownership” and “Place of Effective Management” in Respect of a Passive Holding Company

In this note, the author considers a decision of the Italian Supreme Court on “beneficial ownership” and “place of effective management” for tax treaty purposes, wherein it was held that the meaning of these terms is to be determined in light of the nature and object of a financial holding company and that, therefore, a lack of substantial economic activity does not mean per se that such a company cannot be effectively established in the other contracting state.