Italy Ratifies FATCA Agreement with US
Italy has ratified the inter-governmental agreement top facilitate compliance with the United States Foreign Account Tax Compliance Act.
FATCA, enacted by the US Congress in 2010, is intended to ensure that the US obtains information on accounts held abroad at foreign financial institutions (FFIs) by US persons. Failure by an FFI to disclose information on their US clients will result in a requirement to withhold 30 percent tax on payments of US-sourced income.
Under the terms of the IGA between Italy and the US, Italian FFIs will be required to report their information to the Italian Revenue Agency, which will then automatically exchange the information with the US Internal Revenue Service. There is also a provision for the exchange of information to be reciprocal.
As well as authorizing the Italian Ministry of the Economy and Finance to issue regulations to set up the collection of the required FATCA financial data, and the timing of its transmission to the Italian Revenue Agency, the ratification law also provides an authorization for the Ministry to arrange for the automatic exchange of tax information with other jurisdictions with which Italy has a relevant agreement.
With effect from the same date, Italy also ratified the double taxation agreement with Hong Kong that was signed on January 14, 2013. In addition to setting out the allocation of taxing rights between the two jurisdictions, the deal lowers withholding tax rates and introduces provisions for the exchange of tax information between the two territories.
