Italy Opens Voluntary Disclosure Programme for Foreign Assets

The Italian parliament approved Legislation, on 4 December 2014, to introduce a voluntary disclosure programme under which Italian citizens can regularise undeclared capital held abroad. Taxpayers will be obliged to pay all the taxes due but will be subject to reduced administrative penalties and immunity from some criminal penalties.

Under the final Decree, effective as of 1 January 2015, voluntary self-declarations” of undeclared assets have to be made by 30 September 2015, but persons who are already subject to a tax audit or investigation will not be eligible.

An application for inclusion in the programme will need to contain details of all investments or financial assets held- directly or indirectly-abroad for all the tax periods for which the statutes of Limitation have yet to expire up to 30 September 2014. 

Applicants must be identified by name and will have to provide all relevant bank and other financial intermediary details, so that the history of, and all income from investments can be reconstructed.

The tax rates applied are the statutory rates but it is possible to benefit from a 27% flat tax rate, provided that the average financial assets value is less than €2 million in each tax year. The taxable income will be calculated as 5% of the value of the financial assets at the end of each tax year.

A reduction of 50% of the penalties will apply if the undisclosed financial assets were held in, or are transferred to Italy, another EU Member State or to an EEA Member State that is a “cooperative country”. However, if undisclosed financial assets were held in a currently black-listed non-cooperative state, the related penalties are doubled, unless the non-cooperative state signs an agreement on exchange of information within 60 days of the law entering into force,

Participants in the programme will have to remit all taxes that would have been payable on undeclared investments, in one lump sum or three monthly installments, but with much reduced administrative and criminal penalties. They will also be free from criminal prosecution, including a new criminal offence of money Laundering, which was introduced under the Decree.

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