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Italy: Last call to regularise investments and activities

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Giuliano Foglia


Matteo Carfagnini

In accordance with international anti-avoidance guidelines and in particular with the 2010 OECD's 'Offshore voluntary disclosure' paper, Italy introduced with Law 186 of December 15 2014, the voluntary disclosure procedure. Furthermore, on January 30 2015 and on March 13 2015, the Italian tax authority issued, respectively, the forms to submit the procedure and an explanatory circular letter and therefore the voluntary disclosure is ready to take-off. In brief, any taxpayer can apply for the procedure before September 30 2015 to regularise violations committed up to September 30 2014 for each tax period still subject to tax audit except for those already undergoing tax inspection or assessment.

Under the so-called 'international' voluntary disclosure, individuals, partnerships and non-commercial entities, resident for tax purposes in Italy, are allowed to 'clear', from a tax perspective, all assets and other investments held abroad in breach of the yearly reporting obligation of foreign assets. For these purposes the taxpayer must provide the tax authorities with any useful information in connection with identifying: (i) all assets held abroad; (ii) the income used to constitute such investments abroad; and (iii) any possible income arising from their use or disposal. Such procedure might be useful also for a non-Italian taxpayer who likely could be qualified as resident for tax purposes in Italy for the relevant years or, in any case, who breached monitoring laws while he was resident (for tax purposes) in Italy. Furthermore, a national voluntary disclosure procedure is available for tax law violations connected with income tax (IRPEF and IRES), withholding tax, regional tax on productive activities and VAT in relation to both financial and non-financial assets, regardless of if they are held abroad. It is worth stressing that also corporations are eligible for this latter procedure. Moreover, as confirmed by the Circular letter issued by the tax authorities, non-resident taxpayer (both individuals and corporations) might take advantage of this opportunity to regularise taxable assets not properly declared in Italy for tax purposes. Moreover, national voluntary disclosure procedure could be the proper solution to avoid an assessment on the existence of Italian permanent establishment not declared by foreign companies.

As for the key features of the procedure, in a nutshell, the taxpayer must pay all the taxes and interest due, but he would benefit from a significant reduction of administrative penalties. Furthermore, the voluntary disclosure provides the taxpayer with a shield against certain criminal tax penalties, as well as against the money laundering and self money laundering penalties.

Finally, it is worth noting that the opportunity to apply for the voluntary disclosure procedure must be evaluated (i) in light of the changed international context where the arrangements for the exchange of information are enhancing; and (ii) taking into consideration the self money laundering law recently introduced.

Giuliano Foglia (foglia@virtax.it) and Matteo Carfagnini (carfagnini@virtax.it)

Tremonti Vitali Romagnoli Piccardi e Associati

Tel: +39 06 3218022 (Rome); +39 02 58313707 (Milan)

Website: www.virtax.it

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