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Italy Approves Voluntary Tax Disclosure Program

by Ulrika Lomas, Tax-News.com, Brussels

09 December 2014


Italy's Parliament has approved legislation to introduce a voluntary disclosure program to allow for the regularization by Italian residents of undeclared capital held abroad.

Under the final Decree, voluntary "self-declarations" of undeclared assets will need to be made by September 30, 2015, but persons who are already subject to a tax audit or inspection will be ineligible.

The application for inclusion in the program will need to contain details of all investments or financial assets held abroad (either directly or indirectly) up to September 30, 2014. Each person should be identified by name and they will have to exhibit all relevant bank and other financial intermediary details, so that the history of, and all income from investments can be reconstructed.

Participants in the program will have to remit all taxes that would have been payable on undeclared investments, in one amount or over three monthly installments, but with much reduced administrative and criminal penalties. They will also be free from criminal prosecution, including for the new criminal offense of money-laundering that was introduced by the Decree.

Therefore, the tax and penalties payable in the new voluntary scheme are much greater than the five percent fixed fee within the tax amnesty organized by the Minister of the Economy, Giulio Tremonti, back in 2009/10, and have led the present Minister, Pier Carlo Padoan, to insist that the new program "is not an amnesty, because all who participate have to pay all taxes due."

Giulia Cipollini, head of Italian Tax at Withers LLP, noted that it "takes a very inclusive approach to the entities that can participate, and up to EUR1.5bn (USD1.85bn) of undisclosed tax is expected to be captured by it – the majority from banks in Switzerland."

"Taxpayers with undisclosed assets should take advice on their options and the potential scale of their penalties and sanctions," she added, "but are recommended to engage with the program as soon as possible."

TAGS: money-laundering | compliance | tax | tax compliance | law | banking | offshore | legislation | offshore banking | Italy | penalties | Tax | Tax Evasion

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