Following confirmation earlier this month by the Italian Minister of the Economy Vittorio Grilli that Italy is working towards a tax treaty with Switzerland, possibly by the end of this year, the Head of the Markets Division of the State Secretariat for International Financial Matters in Berne, Oscar Knapp has indicated that its signature could take place by December 21.
Discussions on a treaty commenced in May this year, with a bilateral working group being established to carry forward the negotiations. It has also, so far, involved two meetings between Swiss President Eveline Widmer-Schlumpf and Italian Prime Minister Mario Monti in June and August this year.
As has been confirmed, the parties are talking about an agreement on the regularization of assets already held in Switzerland by non-resident taxpayers, through the payment of a fixed tax rate, and the introduction of a withholding tax on future investment income and capital gains, such as has already been concluded with Switzerland by other European Union countries.
While it is expected that, under the agreement, Italian holders of Swiss accounts will remain anonymous, the Swiss authorities will undertake that they will be subjected to the rate of withholding tax agreed between the two countries in the future.
It has been suggested that the additional tax revenue that would be available to Italy if it were to agree such a deal, on estimated undeclared Italian funds in Switzerland of up to EUR160bn (USD204bn), could amount to some EUR40bn up-front, with other significant funds paid annually thereafter.
The discussions have also covered the necessary modifications that would need to be made to the (previously agreed but uncompleted) double taxation agreement between the two countries, particularly with regard to the exchange of tax information so that Switzerland could be taken off the Italian 'black list', together with possible changes to the existing agreement on the taxation of Italian cross-border workers.
Following finalization of the text of the agreement, it will then be subject to ratification by both countries’ parliaments.A comprehensive report in our Intelligence Report series, examining in depth the situation of offshore transparency and secrecy in a number of the most prominent jurisdictions, is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report2.asp
TAGS: compliance | tax | investment | tax information exchange agreement (TIEA) | double tax agreement (DTA) | tax compliance | law | banking | offshore | agreements | offshore banking | withholding tax | Italy | Switzerland
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