BERN: Italy and Switzerland have agreed an amendment to their double tax agreement to enhance tax information exchange provisions. It is hoped that the agreement will be signed before the March 2 deadline set by Italy’s new voluntary disclosure program to enable Switzerland’s removal from Italy’s “black list.”
After three years of talks, the conclusion of the agreement follows a recent push by Italian lawmakers to approve the voluntary disclosure program, which will allow Italian residents to regularize undeclared capital held abroad. There is a 60-day deadline, from the date of its entry into force, for countries that have not yet signed tax treaties with Italy with an adequate tax information exchange (TIE) provision to do so. These countries otherwise risk inclusion on the Italian black list.
It is expected that the protocol to the DTA, which will incorporate the OECD global standard for the exchange of information upon request, and a roadmap covering other bilateral tax matters will be signed by the end of February 2015. The agreement’s provisions on the exchange of information will apply from the date of signing, in recognition that it could take up to two years for the protocol to be ratified by both states.
Through its negotiations with Switzerland, the Italian Government is hoping to establish a “pincer” movement, whereby it can flush out Italians with undeclared assets in Switzerland, whose details may be disclosed under the revised treaty, while also offering them a voluntary disclosure program to pay reduced fines.
