Capital income is taxable for non-residents when paid by persons resident in Italy; therefore, interest on loans granted by non-resident entities to Italian companies is territorially taxable in Italy.
Article 26, paragraph 5, of Presidential Decree No. 600/1973 provides for a withholding tax of 26 % for non-residents, which may be reduced under the Double Taxation Treaty between Italy and the other State.
However, it is possible to benefit from the provisions of Article 26-quater of the same decree, which grant an Italian exemption for intercompany interest paid to non-resident group companies linked by a shareholding relationship of at least 25 %.