San Marino Changes Bank Secrecy, Hopes For DTA With Italy

by Ulrika Lomas, Tax-News.com, Brussels

26 January 2010

San Marino has approved legislation to relax, in certain respects, its strict banking secrecy regulations, and it is hoping this might mean that a bilateral tax agreement with Italy can be completed as soon as possible.

Previously, San Marino has maintained obligatory banking secrecy, allowing the opening of anonymous accounts. It has now been obliged to opt for more transparency, having been included within those countries that have substantially implemented the Organization for Economic Cooperation and Development's (OECD's) international standard for the exchange of tax information, and placed on the OECD’s “white list.”

Under the new legislation, the anonymity of account holders will be forfeited against accusations of illegality, such as fraud and tax evasion. Details of account holders will be able to be given, on request, to a precise list of institutions, including magistrates, the central bank, the tax office and, above all, those offices charged with the exchange of tax information internationally.

However, outside of those limits, any violation of banking secrecy remains a criminal act and is to be rigorously controlled by the central bank.

The legislation will now be put, for final approval, before the Council of Europe’s Committee of Experts on the Evaluation of Anti-Money Laundering Measures, also known as Moneyval.

At the same time, Antonella Mularoni, San Marino’s Foreign Minister, has expressed the hope that it will now be possible to sign the protocol for the exchange of tax information (TIE) to the San Marino-Italy double taxation agreement (DTA), which was signed in 2002 but never ratified. It was said that negotiation of the text of the protocol was completed in June last year, but never signed.

Mularoni has in mind that the DTA and the TIE protocol could, after signature and ratification by both parliaments, be operational by January 1, 2011. San Marino looks at the agreements with Italy as of absolute importance, as it also develops agreements with other countries. She disclosed that San Marino already has TIE agreements with 20 countries, and expects to reach a total of at least 50 by the end of this year.

Conclusion of the agreements with Italy has been delayed, above all, by the operation of the Italian tax amnesty, which has been extended to end-April 2010. Until their conclusion, the repatriation of funds to Italy (rather than regularization) will be the only option for Italians under the amnesty wishing to declare deposits held in San Marino. Without a bilateral TIE agreement, San Marino remains on Italy’s “black list,” and there have been estimates that around EUR2bn (USD2.8bn) could be transferred out of San Marino’s banks.

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