Switzerland, Italy Treaty Announcement ‘Imminent’
An announcement is expected imminently on the terms of the long-awaited revised tax treaty between Italy and Switzerland, reports say.
According to a report from the ANSA news agency, the push to complete the treaty follows the parliamentary approval of Italy’s new voluntary disclosure program, which allows Italian residents to regularize undeclared capital held abroad.
The program also establishes a deadline of 60 days from its entry into force on March 2, 2015, for countries that have not yet signed tax treaties with Italy to do so, to enable the exchange of tax information, or risk inclusion on its “black list.”
The Italian Government is hoping to establish a “pincer” movement, whereby it can flush out Italians with undeclared assets in Switzerland whose details would risk disclosure under the new treaty, while also offering them the possibility of utilizing the voluntary disclosure program to return their capital to Italy and not pay the harsher penalties imposed on undeclared assets found in “black list” countries.
Italy has always taken a tough line in demanding that any treaty with Switzerland should not offer provisions that would establish a tax amnesty and, in particular, that Italian depositors, who are thought to have large amounts of funds in Switzerland, should not remain anonymous. On the other hand, an effective treaty would be of real importance to Italy, with indications that the additional tax received under the disclosure program could reach EUR5bn (USD5.9bn).
Another sticking point in the treaty negotiations has previously been the division of taxes collected from cross-borders workers. Under the existing agreement, cross-border Italian workers employed in Switzerland are exempt from taxation in Italy, but Switzerland is required to transfer 38.8 percent of the Swiss fiscal revenue collected from them to Italy.
In the recent past, the cantonal Government in Ticino has complained of “wage dumping,” involving the supply of less than market rate labor from Italy, and has sought a revision to this percentage. Italy has been keen to keep the revenue split consistent under a new deal, and there is, as yet, no indication of how this issue is to be resolved.
