Italian Branches Of Swiss Banks Investigated By Revenue Agency

by Ulrika Lomas, Tax-News.com, Brussels

29 October 2009

The Italian Revenue Agency has confirmed the undertaking of a recent significant operation, in conjunction with the Italian Financial Police (Guardia di Finanza), mainly concerning controls on the foreign business of Swiss banks working in Italy.

In fact, 76 financial offices fell within the ambit of this operation, including the Italian branches of Swiss banks, Italian banks of Swiss origin, or offices associated with Swiss financial intermediaries. Checks were also instigated at financial intermediaries situated close to San Marino. Nine Italian regions were covered - Emilia Romagna, Toscana, Lombardia, Veneto, Lazio, Piemonte, Campania, Liguria e Marche.

The investigations were aimed at verifying the completeness and accuracy of information that should have been transmitted by those offices to the Revenue Agency’s database of all foreign transactions made by Italian clients.

That database contains details of all foreign transactions made by Italian clients with financial institutions in Italy, either through regular client accounts, whether open or closed, or “one-off” transactions (essentially, those made in cash or bankers’ draft, directly at the counter).

The objective is that the database should become an ever more useful instrument in the identification of foreign assets held by Italians in violation of the necessary declaration on their annual tax returns.

It has been reported that the investigators obtained computerized information on the clients from the offices being checked, to be later matched up with the names of their clients that had actually been communicated to the Revenue Agency.

The above investigations came as the Swiss government has been reported to be seeking a dialogue with Italy over tax.

Switzerland’s major concern remains that, while it has been taken off the Organization of Economic Cooperation and Development's (OECD) list of countries that have not substantially implemented the internationally-agreed standard for the exchange of tax information, it is still “black-listed” under the current Italian tax amnesty (because it has no tax information exchange agreement within that standard with Italy).

This means that Italians with undeclared funds in Switzerland have to repatriate those assets to Italy to take advantage of the amnesty, rather than have the additional option of regularization – that is, declaration of the assets and payment of the Italian penalty, without repatriation.

It was further reported that Switzerland had proposed a revision of the double taxation agreement between the two countries, including the OECD standard for the exchange of tax information, and that the ball is now in Italy’s court.

However, the possibilities for foreign tax agencies of obtaining financial information, even under such an agreement, are dependent on requests based on existing legal actions, backed by the necessary documentary evidence.

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