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Italy Looks For Pre-Election Tax Pact With Switzerland

by Ulrika Lomas,, Brussels

24 October 2012

Minister of the Economy Vittorio Grilli has disclosed that the Italian government is aiming to reach agreement on the proposed new tax treaty with Switzerland before the next Italian general elections, which are due in the spring of next year.

Discussions on an agreement 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, while the Swiss Federal Council has adopted a mandate setting out the essential points on which it believes the negotiations should be based.

The parties have talked, in particular, around a model for an agreement on the regularization of assets held in Switzerland by non-resident taxpayers and the introduction of a withholding tax on future investment income, such as has already been concluded with Switzerland by Germany, the United Kingdom and Austria.

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.

However, the progress of the negotiations has been slower than expected, with the working group having been originally expected to present concrete proposals by the end of this autumn.

Grilli has now confirmed that work is still continuing on the agreement, with further technical meetings this month. While he underlined that the sooner the treaty could be concluded the better it would be, he also stressed that the Italian government’s objective was to have an agreement with Switzerland based on principles that it considered to be "suitable".

TAGS: individuals | compliance | tax | double tax agreement (DTA) | tax compliance | law | banking | employees | offshore | agreements | offshore banking | withholding tax | Italy | Switzerland | individual income tax

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