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Italy, Vatican TIEA Enters Into Force

by Ulrika Lomas,, Brussels

21 October 2016

The tax information exchange agreement that was signed between Italy and the Holy See on April 1, 2015, entered into force on October 15 and contains a framework for Italian residents to regularize their undeclared assets in the Vatican in Rome.

At the time it was signed, the completion by territories of an adequate TIEA with Italy was seen as a prerequisite for Italians with undeclared assets in those jurisdictions to be able to enter into Italy's voluntary disclosure program (VDP), which closed in November last year, but which is now proposed to be reopened from the beginning of 2017.

The TIEA between Italy and the Vatican provides for the exchange of tax information on request, based on the latest model agreement from the Organisation for Economic Co-operation and Development.

It also establishes a framework whereby those Italian residents with income or financial assets remaining in the Holy See, particularly in the Vatican's bank, the Istituto per le Opere di Religione (IOR), will be able to declare those assets and regularize their Italian tax affairs for all years up to 2015, under terms similar to the VDP and therefore including much-reduced administrative penalties and an exemption from criminal charges.

Such requests, to be made to the IOR within 180 days of the TIEA's entry into force, will not be valid if the Italian resident has any knowledge that he or she is the subject of an Italian tax audit. The IOR will then forward applications electronically to the Italian Revenue Agency within 270 days, and a taxpayer will be required to pay all taxes and interest due within one year of the agreement's entry into force.

TAGS: compliance | tax | tax information exchange agreement (TIEA) | tax compliance | Holy See (Vatican City) | law | banking | tax authority | agreements | Italy | penalties

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