Double non-taxation and other cases of tax savings
October 7, 2015
Luxembourg, New Reporting Obligations for Financial Companies
September 2, 2014
Rappresentante fiscale IVA in Svizzera
January 25, 2016
Agreement between Italy and Switzerland reached
January 16, 2015
On 16 January 2015 Switzerland and Italy have finally reached an agreement on the future cooperation in tax matters. The two governments are now preparing the signature of a Protocol that will amend the existing Double Tax Treaty and a “roadmap”, which should be finalised by the 2 March 2015. This latter is in fact the deadline established by Italian domestic law on the so-called “Voluntary Disclosure Program” (VDP).
The agreement between Switzerland and Italy has been initialled on 19 December 2014. The main goals of the new treaty will be the following:
Introduction of exchange of information between tax authorities in accordance with the OECD standard contained in Article 26 of the Model Convention. This should facilitated the VDP in Italy on investments and assets held in Switzerland by Italian taxpayers.
Elimination of Switzerland from the Italian black lists. This should finally facilitate the economic relationships between Italian and Swiss taxpayers, as today doing business in Switzerland is hindered by massive bureaucratic requirements and forms.
Improvement of the Agreement upon cross-border workers.
Improvement of the access to the Italian market by Swiss financial institutions.
As provided for in the Vienna Convention on the law of Treaties, the Protocol should enter into force after its ratification by the two countries and should apply for the future (i.e. retroactive application should be excluded).
The roadmap, which contains a clear political engagement in respect of the different points included in the agreement, should be published at the same time of the Protocol and should include the following topics:
New exchange of information for tax purposes between Swiss and Italian tax authorities. Fishing expeditions shall be in any case prohibited.
Easier regularisation for the past for those Italian taxpayers participating in the VDP.
Financial institutions and their employees will not be claimed responsible for tax crimes committed by their clients.
Future amendment of the existing double tax treaty with a reduction of the withholding tax rates applied to dividend and interest payments, the introduction of a mutual agreement procedure and a revision of the provision against abuse.
In the future cross-border workers should be subject to a limited taxation in the State of source (i.e. Switzerland) and to ordinary taxation in the State of residence (i.e. Italy). The share pertaining to Switzerland should be maximum 70% of the tax withheld at source. The overall taxation of the workers will remain unchanged.
The elimination of Switzerland from the Italian black lists will only concern those concerning exchange of information as a distinguishing criterion. Swiss favourable tax regimes will be deleted from the black lists once they will be finally removed from Swiss legislation or adapted to international standards.
Access to financial markets: both States are willing to find solutions to enhance cross-border cooperation and the access to their respective domestic financial markets.
Campione d’Italia: new discussions will be started to find pragmatic solutions to the issues concerning VAT and direct taxation.
After many years of controversies, the new Agreement between Switzerland and Italy sets the grounds for better tax cooperation and greater bilateral economic relationships.