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Italy Ratifies Switzerland, Monaco, Liechtenstein TIEAs

by Ulrika Lomas,, Brussels

31 August 2015

Italy's Cabinet on August 7 approved legislation to ratify the tax agreements signed with Switzerland, Liechtenstein, and Monaco.

The protocol to the existing double tax agreement between Italy and Switzerland was signed on February 23, 2015. The Cabinet noted that, once the protocol enters into force following ratification by both sides, its information exchange provisions will apply retrospectively from that signature date. It was also noted that the protocol "widens the boundary of tax information exchange to involve all types of taxation, and foresees an end to banking secrecy. In addition, the two sides have agreed administrative procedures that will guarantee effective and simplified exchange of information."

The Italian tax information exchange agreements (TIEAs) with Monaco and Liechtenstein also provide for automatic exchange on request, and their accompanying protocols allow group requests providing there is evidence that tax compliance is at risk.

In line with the protocol with Switzerland, tax information exchange between Italy and Liechtenstein will apply retrospectively from February 26, 2015, the date of signature of the TIEA.

As adequate information exchange arrangements are now considered to be in place with these jurisdictions, Italy has agreed that they can be taken off its "black list." As a result, Italians with undeclared assets there will be allowed to enter into Italy's current voluntary disclosure program, which allows them to regularize undeclared capital held abroad and access penalty concessions.

Those wishing to be included in the program must file an application by September 30, 2015. Participants have to pay all outstanding taxes. However, the taxpayer will be subject to much-reduced administrative and criminal penalties and will generally be free from criminal prosecution.

The Italian Government is hoping to establish a "pincer" movement, whereby it warns that it can now flush out Italians with undeclared assets in those countries with which it has a TIEA, but also offer them the opportunity of utilizing the voluntary disclosure program before it does so. It hopes that the ratification of these agreements will cause a substantial increase in applications to utilize the program in its last month that it is available.

TAGS: compliance | tax | tax information exchange agreement (TIEA) | tax compliance | law | banking | Liechtenstein | Monaco | agreements | banking secrecy | Italy | Switzerland | penalties | Tax | Tax Evasion

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