Italian Tax Evasion Amnesty May Launch Private Banking Sector

by Carla Johnson, Investors Offshore.com

21 March 2002

The Italian amnesty on tax evaders, recently extended until June, has provided a much needed boost to the country's private banking industry according to reports from the financial services sector.

Speaking to the Bloomberg news service this week, many Italian banks revealed that they are taking out full page advertisements, courting tax lawyers, and even offering to pay the 2.5% tax levied on repatriated funds in order to attract a section of this new market.

Government estimates released before the introduction of the amnesty revealed that underground transactions account for more than 15% of GDP, and the country's private banking sector has traditionally managed only a small fraction of the E400 billion in liquid assets owned by Italy's wealthiest citizens.

However, the tax evasion amnesty, coupled with threats of stringent penalties for those who fail to take advantage of it, has reportedly induced many errant Italian taxpayers to mend their ways.

'We're seeing an acceleration of bigger and bigger amounts of money returning,' Giuseppe Di Sisto, the head of private banking at Credito Italiano told Bloomberg. He predicted that the initiative 'is going to be a huge success.'

Ennio Doris, Chief Executive of Mediolanum SpA supported this assertion, and suggested that: 'The tax amnesty could launch private banking in Italy.'

Banks have reassured returning customers that there is little possibility that they could be punished by a future Government for having placed the money overseas in the first place, as the 2.5% tax on repatriated earnings is stripped out by the bank, and is therefore not linked to individuals.

Meanwhile, the Swiss banking sector, which was the repository of a great deal of Italian money during the political turmoil of the 1960s and 1970s, is putting on a brave face, and has reported that the exodus of Italians repatriating funds has not been as great as initially expected.

Speaking last week on behalf of the Swiss Bankers Association, James Nason explained that: 'It's unrealistic to assume that nobody in Italy is going to take advantage of this amnesty. But we're convinced that people don't just bring their money to Switzerland to avoid paying tax. There are a lot of other attractions.'

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