San Marino Suffers Significant Losses From Italian Tax Amnesty

by Ulrika Lomas, Tax-News.com, Brussels

25 November 2009

With the prospect of further meetings in the near future with their Italian counterparts, San Marino’s government officials have disclosed that the jurisdiction's banks have suffered substantial losses in deposits from the operation of the Italian tax amnesty.

As of November 10, the loss of bank deposits in San Marino from the operation of the Italian tax amnesty were put at around EUR995m (USD1.5bn), out of a total of some EUR13.6bn.

Repatriation of funds to Italy (rather than regularization) has been the only option of Italians with undeclared deposits in San Marino, as the two countries do not have a bilateral agreement to include the internationally agreed standard for the exchange of information for tax purposes (TIEA).

A week later, in a note to the San Marino Forum, the reduction in bank deposits was estimated at EUR1.2bn by San Marino’s Secretary of Finance, Gabriele Gatti. However, further reports in the Forum forecast that the total cost would be up to EUR2.2bn, with some delegates even placing an extreme upper limit of over EUR4.5bn.

Whatever the eventual cost, the drain of funds from San Marino’s banking system is of considerable concern to its government, the authorities have announced.

In fact, the San Marino government has been commenting in recent days that the difficulties with Italy could be resolved in the near future, and that a further meeting with the Italian government is scheduled for November 27. It is hoped that a bilateral TIEA can be agreed at that meeting.

In a separate move which could only aid to a positive outcome of that meeting, San Marino will provide details of up to 350 Italian citizens who had falsely claimed tax residence in the country.

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