Italians Working Abroad Saved From Tax Amnesty Penalty

by Ulrika Lomas, Tax-News.com, Brussels

19 November 2009

The Italian Revenue Agency has saved Italian nationals working abroad from the penalty imposed by the tax amnesty on undeclared foreign funds.

Under the tax amnesty, they would have had to declare the credit balances built up in their bank accounts from salaries received abroad. However, in a circular issued on November 17, the Revenue Agency clarified that amounts in deposit and current foreign bank accounts could be regularized without resorting to the amnesty procedures.

Normally, Italian individuals have an obligation to declare all assets held abroad, including bank accounts, within their annual tax return – form RW. Non-declaration is one of the violations under the tax amnesty.

The thinking behind the circular is not to penalize situations in which, while the final result was the accumulation of deposits abroad, there was no intention on the part of the individuals to behave illegally.

First, it was declared that Italian nationals employed by Italian public agencies abroad had no need to declare their foreign bank accounts within their annual tax declarations. Their obligation to compile form RW would begin only if they use the bank balances to buy other financial assets or foreign investments which could produce income taxable in Italy.

Secondly, Italian employees working abroad, including the employees of multinational companies, who have credit balances in foreign bank accounts in which to receive their salaries, should have declared such funds within form RW. However, as the funds derive from income already paid net of tax, the Revenue Agency is to allow them to regularize their affairs, by making their declaration of balances as at end-2008 within their 2009 tax return. In doing so, they will be subject to the minimum penalty of EUR26 (USD39).

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