Ticino Requests Information On Swiss-Italian Tax Amnesty Talks

by Ulrika Lomas, Tax-News.com, Brussels

15 January 2010

The government of the canton of Ticino has decided to write a letter to the Swiss Federal Council asking for information on the outcome of negotiations with the Italian government on its tax amnesty.

The last contact between the canton and federal governments was in Berne in mid-November last year, during which the latter promised an international solution to the differences with the Italian authorities regarding the application of the Italian tax amnesty. In the meantime, the tax amnesty, which was to expire in mid-December, has been extended to April 2010.

Ticino, the Swiss region likely to be most adversely affected by Italy's tax amnesty in terms of lost assets and employment, began its protest against the terms of the amnesty in October last year.

The cantonal authorities are particularly concerned that undeclared funds held by Italians in Switzerland can only be repatriated, rather than having the alternative choice of regularization (that is, a declaration of the existence of the assets and payment of the penalty, but their retention abroad).

That lack of choice arises from the fact that Switzerland does not have a tax information exchange agreement with Italy including the Organization of Economic Cooperation and Development (OECD) international standard, and therefore remains on Italy’s “black list”.

It was reported that Switzerland had proposed a revision of the existing double taxation agreement (DTA) between the two countries, including the OECD standard, but that negotiations with Italy had not begun.

In fact, possible bilateral DTA negotiations with Italy were suspended at the beginning of November following the raids on 76 Italian offices of Swiss financial institutions by the Italian Revenue Agency investigating their foreign business.

In addition to the request to know the status of any ongoing discussions with Italy, Ticino has also asked the Swiss government to explain the compatibility with the Schengen agreement of the current border checks by the Italian authorities. Those checks are said to include photographs and films of all persons crossing the border.

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