Monday, 23 February 2015

Italy, Switzerland Sign Tax-Information Deal

Italians authorized to seek information on Italian residents who hold assets in Swiss accounts

MILAN—Italy and Switzerland signed on Monday an agreement to exchange tax-relevant information as part of wider negotiations on contentious financial issues between the two countries.
The agreement will allow Italian tax authorities to ask for financial information about Italian residents who hold assets in Swiss bank accounts. So far, these requests weren’t possible due to secrecy laws covering assets stashed in Swiss banks.
To be applicable, the agreement needs to be ratified by both countries’ parliament. This will likely happen by mid-2017, officials from both countries said.
”This is a very important step forward in the relationship between the two countries,” Italy’s Economy Minister Pier Carlo Padoan said. Italy will sign a similar agreement with Liechtenstein on Feb. 26, Mr. Padoan said.
The Italy-Switzerland agreement caps three years of negotiations between the two countries on a number of controversial tax and financial matters. It will make it harder for Italians to hide assets stashed in Swiss bank accounts, to which Italian tax dodgers have traditionally turned to hide undeclared money.
The signing of the agreement will have an immediate effect on Italian residents who decide to adhere to a tax amnesty the Italian government launched in January.
According to the law introducing the “voluntary disclosure” program, Italians who decide to repatriate undeclared assets from Switzerland would have had to pay taxes on the money stashed in the Alpine country in the past 10 years.
With this agreement, they will now pay taxes only on the funds hidden in Swiss bank accounts in the past five years. They will also be subject to lower sanctions.
Mr. Padoan declined to give an estimated amount for the proceeds of the voluntary-disclosure program.
“We have budgeted one euro. I can guarantee it will be more than that,” he said.
Apart from the agreement on the exchange of information upon request, the two countries signed a map for future negotiations on other financial and tax issues, such as the taxation of Italian cross-border commuters.
Currently, the 70,000 Italians who cross the Swiss border every day for work are taxed by Swiss authorities only if they live within 20 kilometers (12 miles) of the frontier.
Swiss tax authorities then pay back 38% of those tax proceeds to the Italian border towns where the commuters live.
The two countries agreed to change this regime. In the future, both countries will tax cross-border commuters. Switzerland has so far agreed with Italy it will apply its tax rates but withdraw only up to 70% of the proceeds due.
Then the workers will be taxed by Italy and will be able to deduct from their Italian tax bill the amounts withdrawn by the Swiss authorities.
Mr. Padoan said the tax burden for these workers won’t immediately change, but is likely to rise in the future.
The two countries said they agreed to go on negotiating to facilitate access to the Italian market for Swiss financial companies as well as on some tax provisions for the inhabitants of Campione D’Italia, an Italian exclave in Swiss territory.
Write to Giovanni Legorano at