Italy has made a crucial move in an attempt to reduce offshore tax evasion, under which countries considered to be tax havens may sign information exchange agreements and secure reduced penalties in disclosing taxes.
According to the Italian Minister of Finance, this was the third agreement to be signed as a part of an intensive campaign to end banking secrecy and reinforce the activities against tax evasion.
The move resulted in Monaco, Switzerland and Liechtenstein all entering into new tax exchange contracts with the Italian authorities.
The agreements are based on the OECD Model Tax Information Exchange Agreement and enable the exchange of information upon request. It will also allow Italian tax authorities to apply for information on groups of taxpayers considered “at risk” of evasion. This will enable the authorities to “unveil the tax authorities information on accounts or financial assets” which allude to not being entirely up front.
Head of Italian tax at Withers Worldwide, Giulia Cipollini, cautioned that the agreement could negatively affect Italian taxpayers with assets in a number of UK territories such as Bermuda and the Cayman Islands. Currently, these countries are waiting for clarity of their treatment from the Italian tax authorities. The contract comes shortly after Italy’s establishment of a voluntary disclosure programme for Italians with offshore assets, and looks to be part of a tactic to deter those hiding taxable assets.